EEOC Proposes Rules Related to Employee Wellness Programs

April 23, 2015 | Insights

Since the passage of the Affordable Care Act (ACA), and in an age of overall rising healthcare costs, many employers are instituting more robust wellness programs in order to reduce their health insurance costs. In these programs, employers offer financial incentives to employees who participate in the employer-sponsored health initiatives and employer-sponsored programs promoting diet and exercise. The purpose of these programs is to promote employees’ taking a proactive approach to their health with the goal of avoiding the high cost of critical care. In other words, an “ounce of prevention is worth a pound of cure.”

In recent years, however, the EEOC and disability-rights groups have expressed concern that this “ounce of prevention” can really be an “ounce of punishment” for employees with disabilities, as many employees with disabilities are not medically able to participate in the program. Thus, in an effort to balance these interests, the EEOC recently released a Notice of Proposed Rulemaking (NPRM) that proposes to amend the regulations and interpretive guidance of Title I of the Americans with Disabilities Act (ADA) as they relate to employee wellness programs. The proposed rule provides guidance on the parameters of employee health programs, defines a “voluntary employee health program,” and provides guidance on the extent to which employers may offer incentives for participation in employee wellness programs and stay within the bounds of the ADA.

Current ADA regulations allow employers to conduct voluntary medical examinations and activities that are part of an employee health program. The EEOC proposed rule provides more clarity in requiring that employee health programs must be “reasonably designed to promote health or prevent disease.” An employee health program that merely collects medical information from employees without providing employees with subsequent health advice or information would likely not meet the standard set forth in the proposed rule. However, an employee health program designed to address health conditions that are common in a particular workplace, after consideration of employee medical information, would likely meet the proposed rule’s standard. For example, an employer cannot collect employees’ BMIs without also providing advice and tools for healthy eating and exercise. Employers should also be aware that the proposed rule further stipulates that, generally, information obtained through an employee health program regarding employee medical information or history may only be provided to employers or other ADA covered entities in aggregate terms that do not disclose the identity of the employee.

Further, the proposed rule clarifies that employee health programs that include disability-related inquiries or medical examinations are voluntary if an employer: (1) does not require employees to participate; (2) does not deny coverage under its group health plan to employees that do not participate—though limited incentives are allowed; and (3) does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees. Additionally, the proposed rule specifies that an employee wellness program that is part of a group health plan is voluntary if employees receive written notice that describes the medical information that will be obtained under the program, the purpose for which the medical information will be used, and the restrictions on the disclosure of the employee’s medical information and the parties with whom the information will be shared.

The EEOC has also been concerned an employer could provide financial incentives for participation that, in effect, make the program involuntary. Thus, the proposed rule limits the sum of incentives that may be offered for participation in employee wellness programs that are part of a group health plan to thirty (30) percent of the total cost of employee-only coverage under a group health plan.

However, the proposed rule provides that wellness programs that do not require disability-related inquiries or medical examinations in order to receive an incentive are not subject to the proposed rule’s limitation. For example, smoking cessation programs do not qualify because they do not require a “medical examination.” Thus, the HIPAA provision that permits employee wellness programs to offer incentives as high as fifty (50) percent of the total cost of employee coverage for participation in tobacco-related wellness programs, would remain intact. Nonetheless, employers should also be aware that reasonable accommodations may be required to enable employees with disabilities to earn financial incentives offered under employee health programs.

The Notice of Proposed Rulemaking are scheduled to have been published in the Federal Register on Monday, April 20, 2015. The general public will have sixty (60) days to submit comments on the proposed rule, with the comment period ending on Friday, June 19, 2015. Though not yet final, the final regulation will likely closely mirror the EEOC’s proposed rule. Accordingly, employers should review their employee health programs to ensure compliance with the EEOC’s guidance.

Judy Bennett Garner, Labor & Employment associate, regularly advises clients on a variety of labor and employment matters, including compliance with EEOC regulations. Mary Emma Karam is a Healthcare partner who regularly advises clients regarding establishment of health insurance plans.