The EEOC’s final rules for wellness programs
The EEOC’s final rules for wellness programs
18 JULY 2016 7:20 AM

Here’s what hoteliers need to know about the latest legal issues surrounding employee wellness programs. 

Employers are increasingly adopting wellness programs out of concern about employee well-being, health care costs, the indirect cost of absences and lost productivity, and competitiveness.

These wellness programs often use medical questionnaires or healthcare screenings to assess employees’ health risk and, in doing so, implicate the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. The Affordable Care Act included provisions to encourage wellness programs via amendments to the Health Insurance Portability and Accountability Act. Notably, HIPAA, as amended by the Affordable Care Act, increased financial incentives that could be awarded to participants in health-contingent wellness programs connected to group health plans.

However, there was uncertainty whether these financial incentives could render a wellness program “involuntary,” and therefore impermissible, under the ADA. There also was further uncertainty about whether an incentive for a spouse to complete a health risk assessment violated GINA. On 17 May, the Equal Employment Opportunity Commission issued final regulations governing the treatment of wellness programs under the ADA and GINA. The new regulations directly address, among other issues, what constitutes a “voluntary” wellness program under the ADA and the permissibility of spousal incentives under GINA.

What wellness programs are covered by the final rules?
The new ADA regulations apply to all employee health programs that ask employees to respond to disability-related inquiries and/or undergo medical examinations to earn a reward or avoid a penalty. The GINA final rule applies where a portion of the inducement offered within a wellness program is for an employee's spouse to answer questions about his or her current or past health status or to take a medical examination.

The rules do not apply to a wellness program that simply requires employees (or their covered spouse) to engage in a certain activity, such as attending a nutrition or weight loss class, to earn an incentive.

The regulations also require that an employee wellness program, including any disability-related inquiries and medical examinations part of such a program, be reasonably designed to promote health or prevent disease.

To satisfy this standard, the program must have “a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.” If a wellness program does not provide information, advice or otherwise address a subset of conditions identified, it will not constitute a wellness program and will not meet the voluntary wellness program exception to the ADA.

When is participation in a wellness program voluntary?
The new regulations list several requirements that must be met for an employee's participation in a covered wellness program to be voluntary:

  • Participation may not be required;
  • access to health coverage cannot be denied to an employee who does not participate in a wellness program;
  • non-participating employees cannot be prohibited from choosing a particular plan;
  • retaliation against any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes is strictly prohibited;
  • notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure must be provided; and
  • an employer must comply with the incentive limits.

What incentives are permitted?
If a wellness program is open only to employees enrolled in a particular plan, then the maximum allowable incentive an employer can offer is 30% of the total cost for self-only coverage of the plan in which the employee is enrolled.

If an employer provides more than one group health plan and participation is not conditioned on enrollment in a particular plan, the maximum inducement under the final ADA rule is 30% of the lowest-cost medical self-only coverage the employer offers. However, Affordable Care Act incentives are capped at 30% of the cost of coverage in which the employee is enrolled.

Under the final ADA rule, for a wellness program that merely asks employees whether they use tobacco, an employer can offer an incentive up to 50% of the cost of self-only coverage. However, where an employer requires any biometric screening or other medical procedure that tests for nicotine or tobacco, the rule’s 30% incentive limit applies.

Under the final GINA rule, the maximum total inducement for a spouse to provide information about his/her health status is 30% of the total cost of (employee) self-only coverage. The GINA rule prohibits employers from offering inducements for medical information of employees’ children.

Next steps
The new notice and rules regarding financial inducements will apply to employer-sponsored wellness programs by the first day of the first plan year that begins on or after 1 January 2017. Employers should review their current wellness programs and ensure compliance with the new wellness regulations and the existing Affordable Care Act wellness regulations.

Jessica Travers is a Shareholder in the Miami office of Littler Mendelson. Her practice primarily focuses in the areas of labor and employment law, and she represents management in the full range of issues that affect the employment relationship.

Ilyse Schuman is a Shareholder and Co-Chair of the Workplace Policy Institute at Littler Mendelson. She is based in the Washington, D.C. office. Ilyse has a deep understanding of employment and labor policy and the legislative and regulatory process, and provides strategic counsel and representation to clients on a broad array of workplace issues and developments in Congress and executive branch federal agencies.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

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