The EEOC has finalized 2 rules relevant to employer wellness programs. The Final Rules, which can be found here and here, amend existing regulations implementing the Americans With Disabilities Act (ADA) and the Genetic Information Non-Discrimination Act (“GINA”), respectively, and specifically address employer-sponsored wellness programs.
The ADA prohibits employers from making disability-related inquires or requiring medical examinations, except in limited circumstances. GINA prohibits employers from requesting, requiring or purchasing “genetic information” about employees and their family members, except in limited circumstances. These prohibitions, coupled with the statutes’ expansive definitions of “disability” and “genetic information” have complicated employers’ well-intentioned efforts to implement incentives aimed at promoting health and disease prevention.
Although the Final Rules differ slightly from proposed rules issued last year, there are no major surprises. The Final Rules permit employers to offer incentives to employees who choose to participate in voluntary wellness programs or who achieve certain health outcomes as long as:
The program is “reasonably designed to promote heath or prevent disease.” The rule explains that this generally means the program provides useful feedback to employees (or their participating spouses) rather than simply alerting the employer to estimated future healthcare costs;
The program is truly voluntary, meaning employees are not required to participate and those who choose not to participate (or who fail to achieve certain goals) are not denied coverage, or subjected to adverse employment actions (i.e. termination, or other on-the-job retaliation);
The program may, as part of a “Health Risk Assessment,” offer inducements for an employee or participating spouse to provide information about his or her own “manifestation of disease or disorder” but may not offer inducements or otherwise request this information specific to the employee’s children;
The employees receive notice describing the medical information that will be obtained, the specific purposes for which it is obtained, with whom the information will be shared, and the methods used to prevent improper disclosure;
Any incentives offered (financial or in-kind) may not exceed 30% of the total cost (employee-paid plus employer-contributed) of employee-only insurance coverage (or 30% of the cost of the second lowest cost Silver plan for a 40 year old non-smoker if the employer offering the wellness program does not offer health insurance). The 30% limit is applied separately to any incentives offered to the employee and any incentives offered to the employee’s participating spouse. It is not a cumulative total;
With limited exceptions, the medical information gathered must be kept confidential and shared with the employer only in an aggregate form not reasonably likely to disclose information specific to any individual employee; and
The employer provides reasonable accommodation to allow employees with disabilities equal opportunity to participate in the programs and to earn incentives.
The recent focus on the U.S. Supreme Court’s analysis of the constitutionality of the Patient Protection and Affordable Act (ACA) has again amplified the health care debate – including, the growing trend of employer wellness incentive programs. If the ACA is upheld, in 2014, the current 20% limit on financial incentives tied to patient health standards will increase to 30% (with the potential that the limit could be increased at the government’s discretion). In light of sky-rocketing health care costs, and glaring statistics, employers are paying attention. See, Society for Human Resource Management, “Wellness Initiatives Can Ease the Pain of Rising Benefit Costs,” 4/4/2012.
A wellness program to promote better health for employees while reducing business costs seems like a no-brainer. However, despite the increasing popularity of these programs, be aware – a poorly designed program could invite litigation and liability under federal, state and/or local laws. For example:
Under the ADA (Americans with Disabilities Act), an employer generally cannot ask for medical information from current employees unless the request is “job-related and consistent with business necessity.” There is an exception to the rule for medical information collected through a voluntary wellness program. However, the EEOC has issued an opinion letter indicating that while some health risk assessment questions regarding eating habits may be acceptable, questions related to how much alcohol the employee drinks would violate the ADA because they are directed at a specific disability.
Under GINA (Genetic Information Nondiscrimination Act), employers are generally prohibited from “using, acquiring, requiring or disclosing genetic information.” It prohibits discrimination against individuals based on their “genetic information” — which is defined broadly enough to include family medical history that may be included in a health risk assessment. GINA has some exceptions for voluntary wellness programs, but there are specific rules on how that information can be obtained from the employee. Notably, the EEOC has taken the position that a program is not “voluntary” when it penalizes an employee who does not complete a health risk assessment by making him ineligible to receive program incentives.
BOTTOM LINE: A well-designed wellness incentive program has the potential to significantly benefit employers and their employees. However, these programs have not been tried and tested under the discrimination laws and regulations. New legislation will continue to be introduced and new lawsuits will be filed to challenge the legality of these programs. As the statistics reflect, the number of individuals who are most likely to be negatively affected by wellness programs tied to health factors is significant and growing. Accordingly, the safest course seems to be to opt for a program that rewards participation, not performance.
The potential claims and penalties associated with violations of the various discrimination laws could be significant, especially in light of recent amendments that include penalties and taxes. Whether you are considering a wellness program or already have one in place, be sure to have counsel review it for compliance with all related laws. Really, do you need more incentive?