The EEOC has issued long-awaited proposed regulations addressing ADA requirements for employer wellness programs. The guidance also addresses the interaction between the new EEOC rules and the existing ACA and HIPAA wellness rules.
In general, the Americans with Disabilities Act (ADA) prohibits employment discrimination based on disability. The ADA directly affects employer wellness programs in a number of ways. For example, the ADA restricts when an employer may make disability-related inquiries or require medical examinations. Wellness programs often include elements of both. For example, a health risk assessment (HRA) may include disability-related questions, and biometric screening programs are considered medical examinations.
Importantly, the ADA includes exceptions for certain types of health plan and wellness programs. Specifically, an employer may make disability-related inquiries or conduct medical examinations if the program is voluntary. Until now, the EEOC had provided very little guidance on how it would determine the voluntary nature of a program, leaving employers in the dark regarding how to design a wellness program that would be in compliance with the ADA rules.
The proposed regulations address the extent to which employers can offer incentives in wellness programs that include disability-related inquiries and/or medical examinations. In some ways, the new EEOC guidance tracks closely with the existing ACA and HIPAA wellness rules. However, it imposes lower limits on the size of the incentive for many common wellness strategies than the limits in the HIPAA wellness rules allow. Importantly, the new rules will not be effective until after publication of the final rules.
Changes to Incentive Limits
Under the EEOC rules, if the wellness program includes disability-related inquiries and/or medical examinations, employers can offer incentives of up to 30% of the total cost of employee-only coverage and the program will still be considered voluntary. This limitation applies to all wellness programs, regardless of whether the program is participatory, health-contingent, or a combination of the two. This is an area in which the EEOC rules differ significantly from existing HIPAA wellness rules. The current HIPAA restrictions on incentives do not apply to participatory programs, so this EEOC rule effectively imposes a new maximum on many types of wellness-related incentives. Prior to this rule, employers could have designed participatory programs with incentives exceeding 30% of the premium. Now if that incentive involves a program that includes disability-related inquiries and/or medical examinations, the maximum incentive possible will be 30%, even if it is a participatory program.
The proposed regulations include special rules for smoking cessation programs. A smoking cessation program that only asks employees whether they use tobacco would not be considered a disability-related inquiry or medical examination, and would not be subject to the EEOC rules. In this case HIPAA rules would still allow an incentive of up to 50% of the premium. However, a wellness program requiring employees to submit to medical testing to determine whether they use nicotine or tobacco is a medical examination and the rules would apply, thereby limiting even tobacco-related incentives to 30%.
In defining a voluntary program, the EEOC takes the position that wellness incentives can be offered to employees as long as participation is not required and nonparticipating employees are neither denied coverage under any employer group health plan nor subject to any adverse employment action. This condition directly addresses a strategy that some employers have begun to adopt in which participation in the employers health plan is contingent on the employees completing an HRA. Under these new rules, this strategy would violate the ADA.
Employer must also provide employees with a notice that includes a description of the medical information collected, who will have access to it, and how it will be used and kept confidential.
The proposed regulations address many employer questions, but some issues still need clarification. For example, the proposed rules do not address how the 30% maximum incentive applies when family members also participate in a wellness program. The EEOC is taking comments on the proposed rules and will then issue final regulations. Additional issues may be addressed in those final rules.
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