On May 17, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) issued final rules for wellness programs under Title I of the American with Disabilities Act at ADA Rules and under Title II of the Genetic Information Nondiscrimination Act at GINA Rules. The EEOC also posted helpful guidance in a question-and-answer format at ADA FAQ and GINA FAQ.
The final rules take effect as of the first day of the health plan year starting on or after January 1, 2017.
Separately, the Health Insurance Portability and Accountability Act (HIPAA) also imposes rules on wellness programs under group health plans. The HIPAA rules have been in place for many years and are not changed by the new ADA and GINA rules.
The three federal laws — HIPAA, ADA and GINA — are intended to prohibit discrimination based on health-related factors and to protect the confidentiality of health information.
HIPAA is enforced by the U.S. Department of Labor (DOL) under regulations issued several years ago and with which employers and their advisors are well familiar. The HIPAA rules do not set limits on the amount of financial incentives that employers may offer under participatory-only wellness programs. Health-contingent wellness programs, on the other hand, are prohibited from offering incentives in excess of 30 percent of the group health plan cost (or 50 percent for programs designed to prevent or reduce tobacco use) and must comply with specific design and administration requirements.
The ADA and GINA are not regulated by the DOL, but instead are under the authority of the EEOC. The ADA generally restricts employers from obtaining their workers’ medical information although employers may make inquiries or do medical exams that are part of a “voluntary employee health program.” The ADA also requires employers to make any wellness program, even one that does not obtain medical information, available to all employees, to provide reasonable accommodations to employees with disabilities, and to keep all medical information confidential.
GINA generally prohibits employers from using genetic information in making decisions about employment and restricts employers from requesting, requiring, or purchasing genetic information unless specific exceptions apply. There are strict confidentiality rules. “Genetic information” is deemed to include past or current health status of family members, including both blood relatives and spouses.
Employers offering wellness programs have struggled for years to reconcile the compliance requirements under the three different laws. For instance, the ADA allows medical inquiries or exams (e.g., biometric screenings) as part of a voluntary employee health program, but what is the meaning of “voluntary”? GINA restricts the use of genetic information, which affects whether wellness programs can be offered to spouses since the spouse’s health status is considered the employee’s genetic information. Employers and their advisors have been anxious for the EEOC to issue ADA and GINA rules to clear up these and other issues.
In announcing the final rules, the EEOC Chair stated “the Commission worked to harmonize HIPAA’s goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require that participation in certain types of wellness programs is voluntary.”
Final ADA Rules — Key Features
Title I of the ADA covers employees (not family members) of employers with 15 or more workers. Two primary requirements apply to employer wellness programs:
- Programs that include any disability-related inquiries or medical exams, whether as part of or outside of a group health plan, must be voluntary (as described below); and
- All programs, whether or not disability-related inquires or medical exams are included, must offer reasonable accommodations so employees with disabilities can participate in the program.
The ADA rules do not distinguish between participatory-only and health-contingent type wellness programs.
A wellness program is considered voluntary if the employer:
- May not require any employee to participate;
- May not deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan;
- May not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes;
- Provides a notice* that clearly explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure; and
- Limits the amount of incentives to no more than 30 percent of the self-only cost of the group health plan.
*The EEOC is expected to release model text for this notice in June 2016.
Further, the program must be reasonably designed to promote health or prevent disease without being overly burdensome on participants or being a subterfuge to shift costs from the employer to employees. As an example, a program is reasonably designed if it provides feedback or health advice to the employee or it uses the collected information in designing programs to address identified conditions.
The 30-percent limit on incentives applies to any wellness program that requires employees to answer disability-related questions or undergo medical exams. Incentives, either in the form of rewards or penalties, include financial incentives and in-kind incentives such as items or trinkets.
The 30-percent limit is based on the self-only cost of the applicable medical plan; i.e., the single COBRA rate excluding administrative fee. If the wellness program is available only to those enrolled in a particular group medical plan, refer to that plan’s self-only cost. If the employer offers a choice of medical plans, or employees can participate in the wellness program without enrolling for medical coverage, refer to the self-only cost of the lowest-cost major medical plan offered. If the employer does not offer a health plan, refer to the cost a 40-year-old nonsmoker would pay for self-only coverage under the second lowest-cost Silver Plan offered on the public Marketplace (Exchange) for the employer’s principal business location.
Caution Regarding Smoking Cessation Programs
There is a key difference between the HIPAA rules and ADA rules affecting certain smoking cessation programs. If the program merely asks whether the employee uses or has used tobacco, HIPAA allows incentives of up to 50 percent of the self-only plan cost and the ADA limit does not apply. If, however, the program includes disability-related inquiries or medical exams, such as biometric screenings or nicotine testing, the ADA limit of 30 percent of self-only plan cost applies.
In any case, employers cannot deny or delay coverage under its group health plan, or limit the plan’s benefits, for employees that do not participate in the wellness program.
The employer must make reasonable accommodations so employees with disabilities can participate in any wellness program offered. Examples include providing health education materials in Braille or large print for vision-impaired employees or offering alternatives to walking programs for employees who use wheelchairs.
Final GINA Rules — Key Features
Title II of GINA prohibits using genetic information in employment decisions, restricts employers from requesting, requiring, or purchasing genetic information unless an exception applies, and limits the disclosure of genetic information. “Genetic information” includes past or current health status, including information about the employee’s spouse.
GINA provides an exception that allows the employer to offer limited incentives for an employee’s spouse to provide genetic information as part of a voluntary wellness program. The most common example is a health risk assessment (HRA) which may include a questionnaire or biometric screening.
The GINA rules are similar to the ADA rules for wellness programs with disability-related inquiries or medical exams. Programs must be reasonably designed to promote health or prevent disease and incentives are limited to 30 percent of the self-only health plan cost. The ADA covers employees, while GINA generally applies the same concepts for spouses.
For instance, voluntary wellness programs offered to employees and spouses may provide an incentive of up to 30 percent of the self-only plan cost to the employee and an additional 30 percent with respect to the spouse.
The final ADA and GINA rules provide that health information on an employee (and spouse, if applicable) must be kept confidential. Although the rules are not identical, both generally provide that employers may only receive information in an aggregate form that does not disclose the identity of individuals. Employers are prohibited from requiring persons to agree to the sale, exchange, sharing, or disclosure of medical information as a condition of participating in the program or receiving an incentive (except as permitted to administer the program).
The HIPAA Privacy Rule, which was established many years ago, applies to wellness programs that are part of a group health plan. In that case, compliance with the HIPAA Privacy Rule likely will also satisfy similar requirements under the ADA and GINA.
Key Points to Remember
Employers may offer wellness program incentives if the program is reasonably designed to promote health or prevent disease. The program may collect health information provided it is used to provide feedback to the participant or to design programs that fit employees’ needs, but not simply to shift costs from the employer to employees.
Wellness programs have been subject to rules under HIPAA for many years. Employers can no longer rely solely on the HIPAA rules, however, and must also consider whether their program is subject to rules under the ADA and/or GINA. Consider the following:
- Does the program include disability-related inquiries or medical exams, such as HRAs or biometric screenings? If so, pay particular attention to the ADA rules.
- Is the program offered to spouses in addition to employees? If so, also review the GINA rules on requesting past or current health status information from spouses.
- Are incentives offered in connection with a smoking cessation program that includes medical testing (e.g., testing for the presence of nicotine)? If so, ensure that the incentives do not exceed the 30-percent limit allowed under the ADA.
Lastly, in addition to requirements under the federal laws discussed here, state or local laws or ordinances may apply. Local requirements often focus on confidentiality and privacy issues. Employers are encouraged to work with legal counsel and advisors with expertise in wellness programs to ensure the program is designed, communicated, and administered in compliance with all applicable rules.