EEOC Rules on Wellness Programs Further Limit Employer Design Options
04/17/2015
- Attorneys:
- Jennifer A. Kraft, Benjamin
J. Conley
Yesterday the EEOC released proposed regulations under the Americans with
Disabilities Act (ADA) addressing wellness programs offered as part of a group
health plan. As described in greater detail below, the proposed
regulations impose much greater restrictions on wellness program designs than
existed under the previously issued HIPAA rules. The proposed rules do not
address the EEOCfs perspective on compliance of wellness programs under the
Genetic Information Nondiscrimination Act (GINA), although the rules note that
those regulations are forthcoming.
Background - Prior Law Imposed Various Limits on Wellness
Programs
Prior to yesterdayfs guidance from the EEOC, there were already various
rules impacting wellness programs under ERISA, the Affordable Care Act (ACA),
HIPAA (Privacy and Portability), GINA, and, where applicable, state insurance
regulations. While most of those rules are well established through
various formal and informal regulatory pronouncements, many plan sponsors were
proceeding with caution in the wellness arena due to (a) a lack of guidance on
wellness programs from the EEOC under the ADA, and (b) various recent
enforcement actions from the EEOC alleging violations of the ADA and GINA for
what were often otherwise compliant wellness program designs. (For a
detailed description of EEOC enforcement efforts, see our blog posts here and
here.)
The EEOCfs most recent action involved a high-profile request for a
temporary restraining order against Honeywell International, Inc. The
request was denied, but the resulting fallout included Congressional inquiries
into the EEOCfs enforcement efforts and left many in the business community
clamoring for clearer guidelines from the EEOC regarding wellness programs and
the ADA. The EEOC finally announced its intent to issue rules, sparking
intense lobbying efforts to further shape the requirements for wellness
programs, including a proposal introduced in Congress that would treat
HIPAA-compliant wellness programs as compliant with the ADA as well. That
proposal was not passed, however, and as described below, the EEOC did not adopt
this approach.
EEOC Rejects ADA Safe Harbor for Wellness Programs as Part of a Bona
Fide Benefit Plan
Most notably, the EEOCfs proposed rules rejected the clear safe harbor
contained in the ADA for wellness programs established as a part of a bona fide
benefit plan. Despite the significance of this shift, the EEOC limits its
discussion of the ADA benefit plan safe harbor to a footnote. It simply
says that wellness programs are gmedical examinationsh and thus must be
gvoluntary.h The EEOC, by so doing, appears to disregard the benefit plan
safe harbor under the ADA.
The courts so far disagree with the position the EEOC is trying to take here
(including a Florida District Court and the Eleventh Circuit in Seff v.
Broward County), and the EEOCfs proposed rules, if they become effective,
could be challenged in court as being inconsistent with the ADA benefit plan
safe harbor.
EEOC Establishes Restrictions for Wellness Programs that are Similar
to, But Broader than Those Imposed by HIPAA
The EEOC guidance clarifies that the ADA rules relating to wellness programs
are limited to those programs involving disability-related inquiries or medical
examinations. To comply with the ADA, the new rules would require wellness
programs that are offered as part of a group health plan to adhere to the
following requirements:
- Limit on Incentives. The proposed rule would limit incentives
linked to completion of a wellness program that involves asking
disability-related questions or conducting medical examinations (such as
completing a health risk assessment) to a maximum of 30% of the total cost of
employee-only coverage. For example, if the total
cost of coverage (employer and employee cost) is $1,000, and
employees typically pay $200, an employee who refuses to complete a biometric
screening could not be charged more than $500 (a $300 differential, which is
30% of the overall cost of coverage). In comparison, the HIPAA rules
would permit a 30% differential based of the cost, calculated based on the
employeefs elected enrollment level (e.g., employee + spouse, family,
etc.). This proposed rule would further undercut the HIPAA rules which
would permit a 50% incentive for smoking cessation programs even if a
disability-related question or medical exam is required. (Presumably,
the 50% incentive would still be permissible if no disability-related inquiry
or medical exam is required, although the EEOC requests comments on this
point.)
In addition, this proposed EEOC rule would apply
to a gparticipation-onlyh wellness program (i.e., one that does not require
the participant to attain any particular outcome). HIPAAfs limit on
incentives only applies to so-called health-contingent wellness
programs.
- Program Must be Voluntary. As noted above, the EEOC remained
steadfast in its earlier stance that wellness programs that are involuntary
violate the ADA. The EEOC would consider a wellness program to be
voluntary only as long as the program:
- Does not require employees to participate;
- Does not deny coverage under any group health plan (or a particular
benefit package within a group health plan) for employees who do not
participate;
- Does not take any adverse employment action or retaliate against,
interfere with, coerce, intimidate, or threaten employees who do not
participate; and
- Provides employees with a notice containing certain information relating
to the program.
What must be included in the wellness program
notice?
Under proposed EEOC rules, the wellness program sponsor must
provide a notice to participants that clearly explains:
- What medical information will be obtained;
- How the medical information will be used;
- Restrictions on its disclosures;
- How the program will prevent improper disclosure of the
information (including whether the program complies with HIPAA Privacy
requirements).
|
- Limits on Disclosure. Information gleaned from the wellness
program may only be used for purposes of benefit plan operations and may only
be disclosed to the employer-plan sponsor in a de-identified, aggregate
form. The preamble to the regulations note that this limitation on
disclosure generally tracks the HIPAA Privacy requirements.
Request for Comments and Next Steps
The proposed EEOC regulations request comments no later than June 19,
2015. Specifically, the EEOC requests comments on:
- Whether similar incentives must be offered to employees who decline the
wellness program but certify that the employee is under active treatment by a
physician for any at-risk conditions;
- Whether gvoluntarinessh should be determined based on whether the
incentives render the coverage gunaffordableh as that term is defined under
the Affordable Care Act;
- Whether the rules should require wellness programs to obtain affirmative
confirmation from participants that they are aware that their participation is
voluntary;
- Whether the rules should contain a gde minimish exemption from these
requirements;
- What rules should apply to wellness programs offered outside of group
health plans; and
- How these rules would/should interact with the HIPAA wellness limits,
such as the limit on incentives relating to tobacco cessation
programs.
In light of the major shift these proposed EEOC regulations would make from
the current requirements, employers should determine whether these proposed
rules would impact their wellness plans and consider submitting comments to the
EEOC.
Copyright © 2015 Seyfarth Shaw LLP.