After years of silence as to how the Americans with Disabilities Act (the ADA) impacts employer compliance with workplace wellness programs, the EEOC late last week issued proposed rules, and a Fact Sheet (http://www.eeoc.gov/laws/regulations/facts_nprm_wellness.cfm) on the topic. The issuance of proposed rules is a welcome development for employer-sponsors of wellness programs, particularly in light of the Chicago regional EEOC office’s initiation last fall of several lawsuits alleging that certain employer wellness program practices violated the ADA. (See our November 2014 Client Alert: Workplace Wellness Programs Under Attack).
As several American business groups and members of the U.S. Senate have observed, some of the EEOC’s 2014 lawsuit allegations stood in direct conflict with the terms of the Affordable Care Act (ACA), which encourages and promotes the use of workplace wellness programs. The new EEOC rules provide proposed additional guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations. The EEOC’s goal is to clarify that wellness programs are permitted under the ADA, but that they may neither be mandatory (i.e. involuntary) nor used to discriminate based upon disability.
“Voluntary” Wellness Programs
The EEOC has long taken the stance that wellness programs that are “involuntary” violate the ADA. If a wellness program is not “voluntary,” the EEOC view is that any wellness program medical questions or examinations (and related financial incentives or penalties) are not permitted, because there is no other job-related or business-necessity reason for asking potentially disability-related questions.
Through its proposed rules, the EEOC now seeks to amend the ADA regulations by precisely defining (for the first time) what incentives/penalties employers may offer as part of workplace wellness programs, while still satisfying the ADA “voluntary” requirements. As proposed, the EEOC would recognize a wellness program as “voluntary” only if an employer:
- Does not require an employee to participate in a workplace wellness program;
- Does not deny an eligible employee coverage under a group health plan or particular benefits package due to the employee’s non-participation in a workplace wellness program (except pursuant to allowed incentives);
- Does not limit the extent of an eligible employee’s group health plan or benefits due to the employee’s non-participation in a workplace wellness program (except pursuant to allowed incentives);
- Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of the ADA; and
- Must provide wellness program notices to all employees that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on the disclosure of medical information, and the methods the employer will use to prevent improper disclosure of the medical information.
Other Proposals
In addition to defining a “voluntary” wellness plan, the proposed rules describe notice requirements under which employers must explain the confidentiality of any medical information obtained from a workplace wellness program.
If finalized without change, the EEOC rules would also expand the regulation of wellness plans, generally, by requiring that certain reasonable accommodations be offered under participation-only wellness plans.(Under current law, reasonable alternative health standards are required under health-contingent wellness program designs, but not under participation-only programs. For more information on health-contingent versus participation-only wellness programs, see our November 2014 Client Alert: Workplace Wellness Programs Under Attack).
Incentives
An incentive, under a wellness plan, may take the form of a group health plan premium discount, rebate, waiver of all or part of a cost-sharing mechanism (such as deductibles, co-payments, or coinsurance), the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan. Regulations promulgated under the ACA permit a wellness plan incentive to equal 30 percent of the total (employer plus employee) cost of coverage under a group health plan. In the case of tobacco cessation incentives, currently-effective rules permit a participating employee to earn an additional incentive in the amount of 20 percent (for a total of 50 percent) of the cost of health coverage.
The proposed EEOC rules, notably, would not recognize the ACA’s additional 20 percent incentive for tobacco cessation programs. Moreover, while current rules define the percentage of permitted incentive with respect to the total cost of an employee’s actual coverage (whether single or family), the proposed rules would limit the total permitted incentive amount to 30 percent of the cost of self-only coverage. These changes would effectively reduce the financial reward (or penalty) available to an employer with respect to both tobacco cessation programs and to employees with family coverage.
No Specific Action Required at this Time
Currently, the EEOC’s proposed rule is a suggested, not a final, rule. Members of the public have until June 19, 2015 to submit comments on the proposed rule to the EEOC. After the June 19 deadline, the EEOC will evaluate all of the comments, make revisions to and vote on the final rule, and will then submit the final rule to other federal agencies for coordination and publication in the Federal Register.
Because the extent to which the proposed rules will be changed prior to finalization is not known, there is no requirement of any specific employer action at this time. Davis & Kuelthau attorneys regularly monitor benefits-related legislative and regulatory developments and are available to assist employers in discussing or reviewing any workplace wellness or other benefits program to evaluate compliance, including with the ACA, the ADA and other laws.
If you have any questions regarding this article, please contact your Davis & Kuelthau attorney.