On April 17th, 2015, the EEOC released new proposed regulations on wellness programs, specifically focusing on the application of the Americans with Disabilities Act (ADA) with wellness incentives linked to a group health plan. The guidance is timely given some recent actions by the EEOC against employers for their wellness programs.
Wellness programs are very common for employers and group health plans, with a recent study showing almost 70% of large employers offering some form of incentive to encourage wellness participation. Often, these are used to promote employee or participant health, reduce health care costs, and prevent medical conditions. To encourage participation, employers, providers, administrators, plans and plan sponsors may offer incentives to participate or to achieve certain health outcomes. In either case, there are a number of legal issues to consider when designing these programs and the EEOC new proposed rules add to those obligations.
The ADA is a very broad rule, applying generally to the terms of employment including benefits. Several new items may be highlighted in the recent proposed rules.
1. SAFE HARBOR NO MORE.
The EEOC position is that wellness programs must comply with these incentive rules to be permissible. Their position is that a broad based safe harbor as found in Seff v. Broward County, 778 F. Supp. 2d 1370 (S.D. Fla. 2011), affirmed, 691 F.3d 1221 (11th Cir. 2012) is not the proper basis to determine permissible wellness incentives.
2. BROAD BASED 30% LIMIT.
The proposed regulations require that all wellness incentives be no more than 30% of the applicable employee only coverage limit. Separate incentives must be combined together and the limit is applicable for participation based wellness (e.g. please fill out this list of questions) and outcomes based wellness (e.g. please achieve this healthy result).
3. 30% LIMIT DOES NOT CHANGE WITH COVERAGE LEVELS.
Unlike the Health Insurance Portability and Accountability Act (HIPAA) wellness rules, this limit is only on the employee level of coverage. This means if the employee coverage costs $2,000 per year, the limit is $600 regardless if the family coverage is $10,000 or higher. This effectively lowers the amount of per-person incentives a plan can offer for spouses, domestic partners, and adult children.
4. NEW NOTICE REQUIREMENTS.
In order to meet the voluntary requirement of the program, a covered entity must provide a notice clearly explaining what medical information will be obtained, how the medical information will be used, who will receive the medical information, the restrictions on its disclosure, and the methods the covered entity uses to prevent improper disclosure of medical information. Special care may need to be given for any future changes to these disclosures, as is the case when wellness programs evolve into new programs.
5. NO DISABILITY RELATED INQUIRY MEANS NO ADA 30% LIMIT.
Not every wellness program must comply with the limit. If the program is merely educational, without asking for medical information of the individual or their family, these kinds of programs are not subject to these new proposed incentive rules. For example, paying participants to listen to or attend a webinar on health eduction does not trigger these new rules. In addition, a program that merely asks employees whether or not they use tobacco (or whether or not they ceased using tobacco upon completion of the program) is not an employee health program that includes disability-related inquiries or medical examinations. However, paying an incentive to walk a certain amount of miles, may trigger other rules like the HIPAA wellness rules.
6. REASONABLE ACCOMMODATION IS BROADER THAN THE 30% LIMIT.
The ADA's requirement to provide reasonable accommodations will apply to all employee incentives even those that do not ask for medical information. Reasonable accommodations includes modifications and adjustments that enable employees to enjoy ‘‘equal benefits and privileges of employment.’’ This can be a very difficult standard to determine sometimes. The "Fact Sheet" also released by the EEOC even includes alternatives to blood tests, sign language interpreters, and providing documents in large print or Braille when warranted.
7. COMPLIANCE WITH ONE LAW DOES NOT MEAN COMPLIANCE FOR ANOTHER.
The EEOC is very clear that just because a wellness programs meets compliance with one area of the law, that does not mean the program complies with other areas of the law. Other applicable laws to a wellness program can include taxes, Title VII discrimination, age discrimination, GINA, HIPAA Nondiscrimination, HIPAA Privacy, Security and Breach Notification.
8. MUST BE REASONABLY DESIGNED TO PROMOTE HEALTH OR PREVENT DISEASE.
In order to meet the 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." This calls into question some programs that do not provide feedback or use the information to design specific heath programs.
9. NEW CONFIDENTIALITY REQUIREMENTS.
The ADA also includes a confidentiality provision for medical information of employees separate than HIPAA Privacy. The proposed rule adds a new subsection to the ADA confidentiality requirements. This new rule says that a covered entity only may receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals except as is necessary to administer the plan. The EEOC states that administrators acting as agents of employers have obligations to ensure this provision is met in addition to the employer. The EEOC also states that employers may generally comply with this new provision by following the HIPAA privacy rules for group health plans, but if personally identifiable health information is provided, a HIPAA certification may be needed.
10. GINA NONDISCRIMINATION IS COMING.
This proposed rule also does not address the extent to which Title II of the Genetic Information Nondiscrimination Act (GINA) affects these programs. For example, one important issue is an employer’s ability to condition incentives on a family member’s participation in a wellness program. The fear is that these may be in violation of GINA's family medical history provisions. The guidance points out that GINA will be addressed in future EEOC rule making.
11. ADDITIONAL COMMENTS REQUESTED.
The EEOC specifically asked for additional comments on several other potential points to these rules. This applying a 9.5% affordable limit from the Affordable Care Act (ACA), certifications from medical professionals to obtain incentives as a reasonable alternative to providing data, de-minimus exceptions to these rues, requiring written confirmations regarding voluntary requirements from participants, the application of the ADA to incentives outside of group health plans, any other methods to ensure compliance, and practical ramifications to these changes. The EEOC requests comments by June 19th, 2015.
If you need help understanding all the wellness rules including the new proposed rules on wellness incentives, please contact Kinney & Larson LLP.