EEOC issues final rules for employer-sponsored wellness programs
By Kevin Hess
Employers nationwide regularly offer wellness programs to their employees-but how much is too much when it comes to providing incentives for their participation? In May, the US Equal Employment Opportunity Commission finally answered that question for employers with its two final rules regulating employer-sponsored wellness programs under the Americans with Disabilities Act and Genetic Information Non-Discrimination Act.
These new wellness program rules, effective in 2017, provide clear guidance for employers on how to comply with the ADA and GINA while maintaining wellness programs. As a result of these new rules, employers will now be able to offer incentives for their employees' participation in wellness programs that ask health-related questions or include medical exams, or in exchange for information about their spouses' current or past medical conditions-so long as the information is not used for discriminatory purposes.
According to the EEOC, these final rules represent the organization's attempt to harmonize the Health Insurance Portability and Accountability Act's goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require participation in them to be voluntary.
What Constitutes a Voluntary Wellness Program?
In general, the term "wellness program" refers to a program or activity offered by an employer to encourage its employees to improve their health and reduce overall healthcare costs. To comply with the EEOC's new rules, an employer-sponsored wellness program must be voluntary. In other words, this means that employers who offer wellness programs are not permitted to:
Require employee participation.
Deny or limit coverage for non-participation.
Take any adverse action against employees for non-participation or failure to achieve certain health outcomes.
Employers must also provide their employees with a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, any restrictions on its disclosure and the protections in place to prevent its improper disclosure.
Is There Such a Thing as Too Much Incentive?
In short, the answer is yes. Under these final rules, the EEOC has outlined maximum incentives that employers are permitted to offer employees for their participation in wellness programs. If an employer's wellness program is open only to employees and family members enrolled in a particular plan, then the maximum incentive an employer can offer is 30 percent of the total cost of self-only coverage of the plan in which the employee is enrolled. If the employer offers multiple plans, then the maximum incentive is 30 percent of the lowest-cost major medical self-only plan provided by the employer.
In addition, these rules will allow employers who do not offer their employees health insurance to provide incentives for their participation in wellness programs. These incentives are capped at 30 percent of the total cost that a 40-year-old non-smoker would pay for self-only coverage under the second-lowest cost Silver Plan available through the state or federal exchange in the location that the employer identifies as its principal place of business.
What Can Employers Do Now?
The EEOC's new wellness program rules have come as welcome news to employers, who for years have been forced to navigate the conflicting requirements of the ADA and GINA without clearly defined guidelines. But with these new rules comes greater responsibility (or liability)-and employers will need to ensure their policies are in compliance.
The comply-by date for these final rules is the first day of an employer's first plan year that begins on or after January 1, 2017. Thus, if an employer's plan begins on February 1, 2017, then that is the date on which the new rules will apply to the wellness program.
In anticipation of the comply-by date, employers should thoroughly review their wellness programs to determine what, if any, changes must be made to comply with the new rules. Important aspects to check include:
Whether the wellness program is considered "voluntary."
The type and amount of health-related information requested or medical testing required under the wellness program.
The amount of any incentives offered.
That proper notice is provided to employees.
Additionally, employers without a wellness program may even want to consider implementing one now that the EEOC has provided a clearer picture of what it requires for such programs.
Kevin Hess is a partner at the Columbus office of Fisher Phillips. His practice involves workers' compensation and employment litigation, focusing primarily on workplace health and safety issues. He also represents and counsels employers on compliance with employment-related laws.