After years of informal commentary and recent enforcement actions against employers (see our prior newsletters EEOC Sick Over Wellness Programs and EEOC Attacks Another Wellness Program), the Equal Employment Opportunity Commission (“EEOC”) finally proposed regulations on the application of the Americans with Disabilities Act (“ADA”) to employer wellness programs. 

The proposed regulations impose new requirements in addition to the requirements already imposed by the Health Insurance Portability and Accountability Act (“HIPAA”). 

Background. HIPAA permits employers to offer rewards for participating in wellness programs, with certain limits on the amount of the reward depending on the design of the program:

• Participatory Wellness Program.  Any reward amount may be provided under a program that does not require an individual to meet a certain health standard (e.g., weight, blood pressure or tobacco use) or participate in an activity (e.g., diet or exercise programs). These types of programs include participation in biometric testing or completion of a health risk assessment (“HRA”).
• Health-Contingent Wellness Programs. Rewards can be no greater than 30% (or 50% for smoking cessation programs) of the total cost of employee and employer premiums for programs that require an individual to satisfy a standard related to a health factor or participate in an activity in order to obtain a reward. Health-contingent wellness programs must also provide a reasonable alternative to any individual who does not meet the initial standard for obtaining the reward.

The EEOC’s Proposed Regulations. In addition to complying with the HIPAA rules, a wellness program must also comply with the ADA. Under the EEOC’s new proposed regulations, employee participation in a wellness program must be deemed “voluntary” to comply with the ADA. For example, the proposed regulations provide that coverage under an employer’s group health plan (or availability of any given level of coverage) may not be limited based on participation in a wellness program.

To be considered “voluntary,” the wellness program must satisfy additional restrictions related to (i) the amount of the reward, (ii) ADA accommodations, (iii) employee notice, and (iv) confidentiality.

• Amount of Reward: The regulations limit the maximum amount of the reward in multiple respects:
  • The proposed regulations cap the maximum reward at 30% for programs that require either the disclosure of disability related information or a medical examination. This limitation impacts (i) participatory wellness programs (which are not subject to a reward limitation under HIPAA), if such disclosures are involved (e.g., completion of an HRA or biometric screening, regardless of the results), and (ii) smoking cessation programs (for which HIPAA permits a 50% maximum reward) if the program is based on a medical examination (e.g., if tobacco use is confirmed by biometric testing).
  • In addition, while the HIPAA regulations permit the reward to include the cost of employee and dependent coverage when dependents are eligible to attain the reward, the proposed ADA regulations specifically focus on the maximum reward in relation to the cost of employee-only coverage.
• ADA Accommodations. All wellness programs must provide reasonable accommodations to enable employees with disabilities to obtain the reward. As a result, participatory wellness programs will now need to provide reasonable accommodations. For example, when an employer provides a reward for attending a nutrition class, an employer with a deaf employee must provide a sign language interpreter so that the deaf employee can understand the class. Health-contingent wellness programs likely already comply with this aspect of the ADA by complying with the HIPAA regulations’ reasonable alternative requirement.
• Notice. The proposed regulations require that employees be provided with a notice that explains:
  • What medical information will be obtained;
  • How the medical information will be used;
  • Who will receive that information;
  • Restrictions on the disclosure of the medical information; and
  • The methods that will be used to prevent improper disclosure of the information.
• Confidentiality. The HIPAA Privacy Rule is applicable to wellness programs. Medical information obtained from employees as part of a wellness program may be provided to employers only in aggregate terms that will not disclose the identity of an employee, except as necessary to administer the employer’s health plan.

Statutory Safe Harbor Marginalized. The EEOC continues to disagree with the Eleventh Circuit’s 2012 decision in Seff v. Broward County (discussed in more detail in the prior newsletters mentioned above). Under the Seff ruling, a wellness program that is part of “bona fide benefit plan” is generally exempt from the ADA’s prohibition against medical examinations and inquiries, making the application of the proposed regulations limited.

Next Steps. The EEOC’s proposed regulations impose additional restrictions on employer wellness programs; however, the extent of the additional requirements will remain uncertain until final regulations are issued. In the meantime, employers should evaluate the current design of their wellness programs and determine whether they satisfy the proposed rules.

Contact Information. For more information from Mazursky Constantine, please contact Don Mazursky (404.888.8840), Kelly Meyers (404.888.8838). For additional information from VCG Consultants, please contact Leslie Schneider (770.863.3617).