Final EEOC Rule Sets Limits For Financial Incentives On Wellness Programs
By Julie Appleby
May 17, 2016 - Kaiser Health News
Employers seeking to get workers to join wellness programs and provide
medical information can set financial rewards – or penalties – of up to 30
percent of the cost for an individual in the companyfs health insurance plan,
according to controversial rules finalized by the Equal Employment Opportunity
Commission Monday.
Although such penalties or incentives could run into the hundreds or even
thousands of dollars, the programs are considered voluntary — and therefore
legal, the commission said.
The rules seek to ensure gwellness programs actually promote good
health and are not just used to collect or sell sensitive medical
information about employees and family members or to impermissibly shift health
insurance costs to them,h the EEOC said.
But the final rules drew immediate concern from some groups.
Jennifer Mathis, director of programs for the Bazelon Center for Mental
Health Law, says the new rule rolls back protections in existing law.
gVoluntary inquiries can now come with steep financial penalties, according
to the EEOC, for choosing not to answer,h she said. gThatfs a troubling
precedent for the application of civil rights laws.h
The highly anticipated rules from the Equal Employment Opportunity Commission
will go into effect next January and will help define how these rapidly
expanding wellness programs are run. They are also an effort to coordinate
consumer provisions in several competing federal laws, including the Americans
With Disabilities Act, the Affordable Care Act and Genetic Information Nondiscrimination Act of
2008.
Generally, employers reacted cautiously to the new rules. Many groups had
advocated for stricter provisions and even higher penalties or incentives.
gWellness programs c are making progress in helping employees and their
families be healthier,h Brian Moynihan, CEO of Bank of America and chair of the
Business Roundtablefs health committee, said in a statement. gCompanies will
review the new guidelines with a view toward ensuring that these programs are
able to continue to make a positive impact.h
But consumer and disability-rights advocates, who had sought broad changes
when the draft rules were unveiled last year, were clearly disappointed. The
regulations donft provide enough privacy protections, they said, and the
programs canft be considered voluntary with the level of incentives and
penalties that were approved by the EEOC.
gThis could coerce employees into providing information that they would
otherwise not provide about their health,h said Sarah Fleisch Fink, senior
policy counsel with the National Partnership on Women & Families, which was
among dozens of groups that wrote comment letters seeking changes in the draft
rule.
The final rules cover a wide variety of issues, from the financial incentives
to how the medical information gathered must be protected.
One rule clarifies what wellness programs must do to comply
with the requirements of the Americans with Disabilities Act (ADA), a law aimed
at preventing discrimination. The ADA generally prohibits employers from
asking questions related to health or disability, except in limited
circumstances, such as through voluntary workplace wellness programs.
Another rule extends the ability of employers to seek health
information from workersf spouses. This can include asking spouses to fill out
health risk questionnaires or have medical exams, so long as the programs are
considered voluntary.
To further clarify whatfs voluntary, the EEOC rules — in effect
— say that employers cannot charge workers the full cost of their health
insurance if they choose not to participate in wellness programs, saying gsafe
harborh provisions in the ADA do not apply to wellness programs. Last December,
the EEOC lost
a federal court case, EEOC v. Flambeau, when an employer used the ADAfs
gsafe harborh clause to argue that it could charge a nonparticipating worker
full costs for health care.
The $6 billion a year workplace wellness industry is booming as employers aim
to reduce the high costs of health care by promoting prevention. Typically,
employers contract with a firm to gather employee information and provide
wellness services.
Most employers have some type of program, but there is little evidence that
these efforts save money or improve health.
The new rules apply to wellness programs offered as part of an employerfs
health insurance package of benefits and to those that are separate from the
health plan.
Some wellness programs are simple: They offer discounts to gyms or access to
weight loss programs. Increasingly, however, programs ask workers to fill out
some kind of health risk assessment questionnaire. And an increasing percentage
also want employees to take medical tests, such as those for high cholesterol,
blood pressure, weight or diabetes.
Workersf advocates had sought a provision in the final rule to give employees
an exemption to filling out the risk assessment or having a medical exam if they
instead provided doctorsf certifications that they were under medical care. The
final rule did not add that exemption.
The rules also kept the limits on financial incentives that was in the draft
regulation largely intact. Slightly more than half of workplace wellness program
use financial rewards or penalties to encourage workers to participate. Those
incentives range from small-dollar gift cards to discounts for the health plan
premium or annual deductible. Employees who donft participate donft get the
discounts, which some advocates say is a penalty.
The rules say the total dollar amount of the incentive or penalty canft
exceed 30 percent of single-only coverage offered by the employer. At an average
cost of roughly $6,000 a year, that could be about $1,800. That amount could be
doubled if the employee has a spouse on the plan, according to the rule.
Smokers, however, may see higher costs if they choose not to participate.
Those who acknowledge their smoking can face financial incentives — or
penalties — of up to half the cost of single-only coverage. But, if an
employer requires medical testing to determine if employees smoke, the limit
drops back to 30 percent under the rules.
Employers had pushed to keep the higher smoking limit even with a test.
Republican lawmakers, too, wanted the incentives to be allowed to go as high as
50 percent of the cost of health plan coverage for smokers who participate, just
as the federal health law allows insurance premiums to vary by up to 50 percent
for smokers.
Senate Health and Labor Committee Chairman Lamar Alexander, R-Tenn., said
Monday that the rules gcontradict the law and continue the confusion the agency
has caused.h
Employers also sought to set the total dollar amount of incentives higher, at
30 percent of the cost of family health insurance coverage, which averages more
than $17,000 a year.
As the programs start asking about ever more sensitive areas — genetics,
mental health issues, finances, sleep habits and overall well-being
— therefs growing concern about whether existing privacy and
anti-discrimination regulations are adequate.
The new rules aim to address those concerns by requiring employers to tell
workers which entities — such as the third party administrators that
typically run wellness programs for employers — can access their personal
medical data.
Additionally, any data gathered by the wellness company and then shared with
employers must generally be in an aggregate form that isnft likely to disclose
the identity of individual employees.
Still, advocates say, the regulations have a loophole that does allow
employers to see individual data provided to the wellness programs if needed to
administer their health plans. That is designed to avoid delays in
patients getting treatment and making sure bills are paid on time. But consumer
advocates raise concerns that such rules open a loophole for too much
information sharing with health plan sponsors, which can include self-insured
employers.
gThe privacy protections are still weak,h said David Certner, legislative
counsel for the AARP.
In a section added since the draft proposal was released, the rules also
require that wellness programs may not require employees gto agree to the sale,
exchange, sharing, transfer or other disclosure of medical information c as a
condition of participating.h
Additionally, wellness programs canft collect the medical information simply
to have it.
Instead, it must be used to advise a worker how to improve health or to
design a wellness program.
Such programs must be greasonably designedh to improve health and not a
gsubterfuge for violating c laws prohibiting employment discrimination.h
AARP was one of the consumer groups issuing statements Monday saying the new
rules fall short.
gOlder workers, in particular, are more likely to have the very types of
less visible medical conditions and disabilities — such as diabetes, heart
disease, and cancer — that are at risk of disclosure by wellness questionnaires
and exams,h the AARP said in its statement. gBy financially coercing employees
into surrendering their personal health information, these rules will weaken
medical privacy and civil rights protections.h