EEOC Issues Final Rules For Wellness Programs Under the ADA and GINA
On May 17, 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued a final rule for employer wellness programs under the Americans with Disabilities Act (“ADA”). In 2015, the EEOC previously issued a proposed rule regarding this topic, a discussion of which can be found in our prior blog post.
Also on May 17, 2016, the EEOC issued a final rule for employer wellness programs under the Genetic Information Nondiscrimination Act (“GINA”). Similarly, the EEOC previously issued a proposed rule about this topic in 2015, which we discussed in another blog post.
Under the EEOC’s final rules for both the ADA and GINA, wellness programs were defined to include wellness programs that are part of an employer-sponsored group health plan, and wellness programs that are not tied a group health plan.
A brief summary of the final rules is provided below, which describes how the final rules expanded and/or clarified information from the proposed rules. For additional information on the basics of wellness programs, check out another one of our prior blog posts.
Final ADA Rule
The EEOC issued the final ADA rule to provide guidance on the extent to which employers may offer incentives to employees to participate in wellness programs that ask them to answer disability-related questions or undergo medical exams.
The EEOC’s final rule pertaining to wellness programs under ADA clarified or expanded the proposed rule in the following ways:
1. Incentives Are Limited For All Wellness Programs That Seek Disability Related Inquiries and Medical Exams. Unlike HIPAA and the Affordable Care Act, the final ADA rule places limits on disability-related inquiries and medical examinations related to wellness programs, regardless of how the information obtained is ultimately used. Therefore, the final rule clarifies that the limit on incentives applies to any wellness program that requires employees to answer disability-related questions or undergo medical examinations (whether it is participatory or health contingent). In contrast, under HIPAA and the Affordable Care Act (which apply only to wellness programs that are part of a group health plan), “participatory wellness programs” do not impose any incentive limits, as long as the programs are available to all similarly situated individuals, and incentives are made available regardless of a health factor.
2. How Incentives Are Calculated for Employers With More Than One Group Plan But Offers A Wellness Program That Doesn’t Require Employees To Participate In A Particular Plan. When an employer offers more than one group health plan but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30% of the lowest cost major medical self-only plan the employer offers. For example, if an employer offers three self-only major medical plans, ranging from $5,000 - $8,000, and wants to offer an incentive to employees for participating in a wellness program and completing a HRA, the employer could offer a maximum incentive of $1,500, which is 30% of the employer’s lowest cost plan.
3. Employers May Offer An Incentive To Employees Who Participate In A Wellness Program Even If The Employer Does Not Offer Health Insurance. If an employer does not offer health insurance, but wants to offer an incentive for employees to complete a HRA or to participate in annual testing for glucose and cholesterol levels, the employer may offer an incentive up to 30% of the cost that a 40-year-old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal Exchange in the location that the employer has identified as its principal place of business. If such a plan would cost an employee $4,000, the maximum incentive the employer could offer is $1,200.
4. Confidentiality. The final rule adds two new requirements. First, a covered entity only may receive information collected by a wellness program in the aggregate form, that does not disclose and is not reasonably likely to disclose the identity of specific individuals except as necessary to administer the health plan. Second, an employer may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information, or to waive confidentiality protections under the ADA as a condition for participating in a wellness program, or receiving an incentive for participating - except to the extent permitted by the ADA to carry out specific activities related to the wellness program.
5. Employer’s Notice. The EEOC will provide a sample notice on its website, but advises employers to provide a new notice to employees if prior notices did not contain information about what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure. Therefore, employers should review prior communications to its employees to see if they are in compliance with the final rule.
6. ADA’s Safe Harbor Provision For Insurance Does Not Apply to Wellness Programs. The final rule expressly states that the ADA’s “safe harbor provision” - which allows insurers and plan sponsors (i.e. employers) to use information about risks posed by certain health conditions to make decisions about insurability and insurance costs - does not apply to wellness programs even if they are part of an employer’s health plan.
While the final ADA rule is effective on July 18, 2016, the final rule applies prospectively to employer-sponsored wellness programs on the first day of the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the final rule. For example, if the health plan used to calculate permissible incentive limits begins on March 1, 2017, the provisions of incentives and notice requirements will apply to the wellness program as of that date. However, the rest of the provisions of the rule (non-incentive related), which clarify existing obligations, such provisions apply both before and after publication of the final rule (May 17, 2016).
Final GINA Rule
The EEOC issued the final GINA rule to clarify that an employer may offer a limited incentive for an employee’s spouse to provide information about the spouse’s current or past health status, as part of a voluntary wellness program.
The EEOC’s final rule pertaining to wellness programs under GINA clarified or expanded the proposed rule in the following ways:
1. The Final Rule Applies to Employers Even If There Is No Group Health Plan. Unlike the proposed rule, the final rule applies to all wellness programs, regardless of whether the wellness program is offered through a group health plan or not. If an employer does not offer a group health plan, the employer may still offer an incentive to an employee’s spouse for providing information about his or her current health status. The maximum incentive for the spouse to provide health information is 30% of the total cost to a 40-year-old non-smoker purchasing coverage under the second lowest cost Silver Plan available through the state or federal Exchange in the location that the employer has identified as its principal place of business. For example, if a 40-year-old non-smoker could purchase the second lowest cost Silver Plan for $4,000, the maximum incentive the employer could offer for the employee’s spouse to provide health information as part of a wellness program is $1,200.
2. How Incentives Are Calculated for Employers with Numerous Group Health Plans. If an employer offers more than one group health plan, but offers a wellness program that does not require employees or their families to enroll in a particular group plan, the maximum incentive is 30% of the lowest cost major medical self-only plan the employer offers. For example, if an employer offers three self-only major medical plans, ranging from $5,000 - $8,000, the maximum incentive for an employee’s spouse to provide health information is $1,500, which is 30% of the employer’s lowest cost plan.
3. Employers Cannot Sell, Exchange Transfer, Distribute Health Information. The proposed rule prohibited an employer from requiring an employee or spouse to agree to the “sale” of health information in exchange for an incentive, or as a condition for participating in a wellness program. However, the final rule was expanded to also include the “exchange, transfer, or other distribution” of health information.
4. No Retaliation or Denial of Access to Insurance if Employee’s Spouse Refuses to Provide Information About Spouse’s Current or Past Health Status. The final rule includes new language that prohibits employers from denying access to health insurance, or to any benefits packages, and prohibits retaliation against, any employee whose spouse refuses to provide information about his or her current or past health status to an employer wellness program.
While the final GINA rule is effective on July 18, 2016, the final rule applies prospectively to employer-sponsored wellness programs on the first day of the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the final rule.
If your company has questions about these final rules, or has other inquiries related to wellness programs, contact the author of this post.