Category Archives: wellness program

Has Your Wellness Program Had a Check-Up Lately?

Contributed by Suzannah Wilson Overholt, October 1, 2019

EMPOLOYEE WELLNESS Businessman drawing Landing Page on blurred abstract background

Wellness programs are a popular employee benefit. Whether an employer already has a program in place or is considering implementing one, it should be mindful of the requirements of federal law.

The Health Insurance Portability and Accountability Act (HIPAA) divides workplace wellness programs into two categories: participatory and health-contingent.  The latter are subject to specific nondiscrimination standards while the former are not.

Participatory programs give an employee a reward for engaging in a specific act.  These include gym membership reimbursement; diagnostic testing with rewards not based on outcomes; reimbursement for the cost of smoking cessation programs (regardless of whether the employee quits); and rewards for attending free health education seminars. As long as participation is available to all individuals, the program complies with HIPAA’s nondiscrimination requirements.  There is no limit on financial incentives for these programs. 

By contrast, health-contingent programs require individuals to meet certain health-related standards to qualify for rewards. There are two categories of health-contingent programs: activity based and outcome based. These programs must follow certain nondiscrimination standards. 

Activity based programs require performance or completion of an activity related to a specific health factor to obtain a reward but not a specific health outcome. Examples include walking, diet, and exercise programs.

Outcome based programs require that a particular health outcome or reasonable alternative be reached or maintained. These programs generally have a measurement, test, or screening as part of an initial standard and a larger program targeting individuals who do not meet the initial standard. Examples of such standards include quitting smoking, lowering cholesterol, or meeting certain exercise goals.

Five non-discrimination standards apply to all health-contingent programs:

  1. Participants must be allowed to qualify at least once a year;
  2. The incentive/penalty must be limited to 30% of the cost of the premium for the plan (50% for programs related to reducing tobacco use);
  3. The program must be reasonably designed to promote health or prevent disease;
  4. The full reward must be available to all similarly situated individuals, and the program must provide a reasonable alternative standard to achieve the reward; and
  5. Notice must be provided of other means of qualifying for the reward.

Regardless of the type of program, privacy rules apply if the program conducts health risk assessments (HRAs) or monitors employee health.  HIPAA prohibits employers from using protected health information for employment-related reasons.

The Americans with Disabilities Act (ADA) requires that wellness programs be voluntary.  The rewards associated with a wellness program cannot be so significant that an employee feels coerced to participate.

The Genetic Information Non-Discrimination Act (GINA) is an issue if the program collects genetic information. Any HRA conducted prior to, or in connection with, benefit enrollment may not collect genetic information, including family medical history. Such information may only be requested after enrollment. No reward may be tied to providing genetic information. HRAs that do not request such information can be tied to a reward. 

Employers should consult their program designers to ensure their wellness programs comply with these regulations.

Federal Court Strikes Down Certain EEOC Wellness Program Regulations, Effective January 1, 2019

Contributed by Steven Jados, January 12, 2018

In a recent decision with a nation-wide effect, the U.S. District Court for the District of Columbia struck down certain provisions of the EEOC’s Wellness Program regulations.

As we have previously discussed, workplace wellness programs generally provide certain incentives to employees as part of programs intended to prevent illness and encourage healthier lifestyles.  But these programs can run afoul of various federal and state anti-discrimination laws, particularly the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”), if the programs require employees to disclose private medical information under circumstances that are not truly “voluntary.”

The inherent difficulty with wellness program incentives is the notion that, at some point, a reward or penalty becomes so great that it becomes impossible to refuse.  At that point, the incentives are so coercive that the wellness program can no longer be considered voluntary under the ADA and GINA.

To assist employers with implementing ADA and GINA-compliant wellness programs, the EEOC issued regulations in May 2016 that set an upper limit on incentives (which can take the form of rewards or penalties) linked to wellness program participation of 30% of the cost of employee-only health care coverage.  Under the regulations, the EEOC considered wellness programs that complied with the 30% incentive threshold as falling within the definition of “voluntary.”

In August 2017, however, the D.C. district court ruled that the 30% incentive regulations were improper.  The main shortcoming of the regulations, as identified by the court, is that the EEOC apparently set the 30% threshold without any concrete data or reasoning to support the proposition that an incentive crosses the line from voluntary to involuntary at 30% of the cost of health insurance.  Instead of striking down the regulations entirely at that time, the court gave the EEOC the opportunity to modify the regulations.

In the closing days of 2017, the court revisited the issue and determined that the EEOC was not moving quickly enough to correct the regulations on its own, and the court vacated the 30% incentive regulations—but did so with an effective date of January 1, 2019, in order to minimize disruptions to existing wellness programs and to allow employers sufficient time to modify their wellness programs in the future.

The court also noted that the effective date of January 1, 2019, was intended in part to provide the EEOC additional time to issue new regulations.  Prior to the December ruling, the EEOC told the court that the EEOC intended to issue proposed regulations by August 2018, but that final regulations would not go into effect until 2021.  The court’s response was that 2021 is “unacceptable,” and the court “strongly encouraged” the EEOC to accelerate its timeline.

With all of that in mind, the bottom line is that until the EEOC issues new regulations, employers must consider structuring wellness program incentives with an eye toward documenting, with concrete data and analysis, that the program’s incentives are not so great–and, therefore, not so coercive—that the program becomes involuntary.  Stay tuned, as we will closely monitor any further action and guidance from the EEOC on this issue.