By Pamela Wolf, J.D. and Joy P. Waltemath, J.D. The EEOC has released a pair of final rules that map out the extent to which employers may offer inducements and incentives for participation in wellness programs without running afoul of the ADA and GINA. Scheduled for publication in the Federal Register on May 17, both final rules will be effective 60 days after publication, but would apply beginning on January 1, 2017. The two rules provide guidance to both employers and employees about how workplace wellness programs can comply with the ADA and GINA consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act. Many employers offer workplace wellness programs intended to encourage healthier lifestyles or prevent disease. These programs sometimes use medical questionnaires or health risk assessments and biometric screenings to determine an employee's health risk factors, such as body weight and cholesterol, blood glucose, and blood pressure levels. Some of these programs offer financial and other incentives for employees to participate or to achieve certain health outcomes. According to the EEOC release accompanying the regulations, both of the new rules permit wellness programs to operate consistent with their stated purpose of improving employee health, while including protections for employees against discrimination. The final ADA rule provides that wellness programs that are part of a group health plan and that ask questions about employees' health or include medical examinations may offer incentives of up to 30 percent of the total cost of self-only coverage. The final GINA rule provides that the value of the maximum incentive attributable to a spouse's participation may not exceed 30 percent of the total cost of self-only coverage, the same incentive allowed for the employee. No incentives are allowed in exchange for the current or past health status information of employees' children or in exchange for specified genetic information (such as family medical history or the results of genetic tests) of an employee, an employee's spouse, and an employee's children. In addition to the regs themselves, the EEOC also published question-and-answer documents on both rules: Q and A for the ADA wellness rule and Q and A for the GINA wellness rule. Also included are two documents for small businesses at https://www.eeoc.gov/laws/regulations/facts-ada-wellness-final-rule.cfm and https://www.eeoc.gov/laws/regulations/facts-gina-wellness-final-rule.cfm. Some of the more notable aspects of both rules are discussed below. ADA final rule. The final rule amending the regulations and interpretive guidance implementing Title I of the ADA provides guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries and/or undergo medical examinations. This rule applies to wellness programs considered “employee health programs” under Title I of the ADA. The EEOC noted that a wellness program that is an employee health program may be part of a group health plan or may be offered outside of a group health plan or group health insurance coverage. All of the rule’s provisions apply to all employee health programs that ask employees to respond to disability-related inquiries and/or undergo medical examinations. Conversely, wellness programs that do not include disability-related inquiries or medical examinations (such as those that provide general health and educational information) are not subject to the final rule; however, those programs must be available to all employees and must provide reasonable accommodations to employees with disabilities. Safe harbor provision. As in the proposed rule, under the final rule, the safe harbor provision does not apply to an employer’s decision to offer rewards or impose penalties in relation to wellness programs that include disability-related inquiries or medical examinations. Under the safe harbor provision, “an insurer or any entity that administers benefit plans is not prohibited from ‘establishing, sponsoring, observing or administering the terms of a bona fide benefit plan based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law,’” the commission explained. The EEOC specifically noted its disagreement with two court decisions that have applied the safe harbor provision “far more expansively to support employers’ imposition of penalties on employees who do not answer disability-related questions or undergo medical examinations in connection with wellness programs.” In both cases, Seff v. Broward County and EEOC v. Flambeau, Inc., the employers did not use wellness programs in a manner consistent with the application of the safe harbor provision, according to the commission. “In neither Seff nor Flambeau did the employer or its health plan use wellness program data to determine insurability or to calculate insurance rates based on risks associated with certain conditions—the practices the safe harbor provision was intended to permit,” wrote the EEOC. “Moreover, there is no evidence in either Seff or Flambeau that the decision to impose a surcharge or to exclude an employee from coverage under a health plan was based on actual risks that non-participating employees posed.” Incentive cap. Under the final rule, as in the proposed rule, an employer may offer incentives up to a maximum of 30 percent of the total cost of self-only coverage (including the employee’s and employer’s contribution), whether the incentive is a reward or penalty, to promote an employee’s participation in a wellness program that includes disability-related inquiries and/or or medical examinations, so long as participation is voluntary. The 30-percent cap applies to all workplace wellness programs whether offered only to employees enrolled in an employer-sponsored group health plan; offered to all employees whether or not they are enrolled in such a plan; or offered as a benefit of employment where an employer does not sponsor a group health plan or group health insurance coverage. Calculation of incentive. The final rule addresses calculating the permissible incentive cap in four situations: Calculation of incentive. The final rule addresses calculating the permissible incentive cap in four situations:
- Where participation in a wellness program depends on enrollment in a particular group health plan, the employer may offer an incentive up to 30 percent of the total cost of self-only coverage (including both employer and employee contributions) under that plan.
- Where an employer offers a single group health plan, but participation in a wellness program does not depend on the employee’s enrollment in that plan, an employer may offer an incentive of up to 30 percent of the total cost of self-only coverage under that plan.
- Where an employer has more than one group health plan, but participation in a wellness program does not depend on the employee’s enrollment in any plan, the employer may offer an incentive up to 30 percent of the total cost of the lowest cost self-only coverage under a major medical group health plan offered by the employer.
- Where an employer does not offer a group health plan or group health insurance coverage, the rule uses the cost of the second lowest cost Silver Plan available through the state or federal health care Exchange established under the Affordable Care Act (ACA) in the location that the employer identifies as its principal place of business as a benchmark for setting the incentive limit. Therefore, an employer may offer incentives up to a maximum of 30 percent of the cost that would be charged for self-only coverage under such a plan if purchased by a 40-year-old non-smoker.
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