NOTE: As I breathlessly reported last week, the EEOC has issued its long-awaited proposed rule on employer wellness programs and the Americans with Disabilities Act. (Here is a nicer copy than the one that was available then.) Brian Magargle, who knows a lot more than I do about the Health Insurance Portability and Accountability Act and the Affordable Care Act, and I are working together on a “multidisciplinary” overview of the proposed rule. Meanwhile, here is my summary of the proposed rule.

What pressing issue does this proposed rule address? For the history of the ADA/wellness controversy, go here, here, and here.

Is the proposed rule good for employers, or bad? Pretty good overall. The EEOC has, for the most part, proposed that providing “incentives” for employees to participate in wellness programs (both rewards and penalties, which we’ll call “carrots” and “sticks”) will be all right as long as the employer complies with the limits in the HIPAA/Affordable Care Act. In other words, incentives to that extent would, for the most part, not make the wellness program “involuntary” for ADA purposes. Which means that medical inquiries made in connection with such a wellness program will generally not violate the ADA.

One catch: The wellness program would have to be associated with a group health plan (either insured or self-insured).

Another catch: The EEOC proposals don’t exactly match the HIPAA/ACA rules, but they’re reasonably close.

Can you give us a recap of the HIPAA/ACA requirements? Under the HIPAA/ACA scheme, there are two types of wellness programs. A “participatory” program is one that rewards employees just participating. Hence the name. (An example would be an employer who reimburses employees for fitness club memberships.) Under the HIPAA/ACA, participatory programs can be offered without limitation, as long as they’re available to all similarly situated individuals.

The other type of program is a “health-contingent” program. There are two types of “health-contingent” programs: (1) activity-only programs, in which the employee is rewarded for completing an activity but doesn’t have to achieve or maintain an outcome (for example, “we’ll pay you $100 if you walk a mile three days a week for a year”); and (2) outcome-based programs, in which employees are rewarded for achieving or maintaining results (for example, “we’ll pay you $100 if you keep your BMI at or below 25 for a year, or if you quit smoking”).

If the program is health-contingent, employers are allowed to offer incentives (carrots or sticks) if

  • Employees are allowed to try to qualify at least once a year
  • The total reward offered doesn’t exceed 30 percent of the total cost of employee-only coverage under the plan (total means the employee’s and the employer’s share) . . . and the percentage is 50 percent for tobacco prevention or reduction
  • The program is reasonably designed to promote health or prevent disease
  • The full reward must be available for all similarly situated individuals, and reasonable alternatives must be offered to those who can’t qualify, and
  • The availability of reasonable alternatives must be disclosed in plan materials and in any disclosure telling an individual that he or she did not meet an initial outcome-based standard.

Under the HIPAA/ACA, the 30 percent/50 percent incentive applies only to “health-contingent” programs. HIPAA and the ACA have no limit on rewards that apply to “participatory” programs (if the programs are available to all similarly situated individuals).

The EEOC’s proposed rule is slightly different.

What does the EEOC say? The EEOC would allow employers to offer incentives (carrots or sticks) for employee participation in wellness programs associated with group health plans if the total reward does not exceed 30 percent of the total cost of employee-only coverage under the plan for both participatory and health-contingent plans, AND if the wellness program is voluntary. The EEOC would define “voluntary” as follows:

  • Employees aren’t forced to participate in the wellness program,
  • Health insurance coverage is not denied or made more difficult to get if the employee chooses not to participate (with the exception of the permitted “incentives”), and
  • The employer does not take adverse action against an employee for refusing to participate . . . as this employer allegedly did.

The employer would also be required to provide a notice “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 its disclosure, and the methods the covered entity will employ to prevent improper disclosure of the medical information.”

The EEOC invites the public to comment on the proposed rule through June 19. The agency is particularly interested in comments pertaining to how much medical information an employee should be required to disclose to be eligible for an incentive, whether the rule should require that the incentives not render health insurance “unaffordable” within the meaning of the ACA, issues related to the “notice” requirement, how to treat wellness programs that are not associated with group health insurance, as well as other topics.

The wellness program would be required to disclose medical information to the employer only in aggregated, non-individually-identifiable form, “except as needed to administer the health plan.”

Did the EEOC recommend any “best practices”? Yes. (I love it when they do that!)

  • Make sure that employees who handle medical information know their obligations under the laws.
  • Adopt privacy policies for collection and handling of employee medical information.
  • If medical information is stored electronically, it should be encrypted.
  • Employees who handle medical information should not be “making decisions related to employment, such as hiring, termination, or discipline.” If this isn’t possible (for example, with a small company that has to do it all), then the employer should ensure that there is no discrimination based on an employee’s disability.
  • Breaches of confidentiality should be promptly and effectively addressed, and the affected employees should be informed immediately.
  • Employers should take appropriate action against an employee who breaches confidentiality, and should “consider discontinuing” their relationships with vendors who breach confidentiality.

Anything else of interest? If you’re a wellness nerd, then heck yes:

  • The EEOC has explicitly disagreed with a wellness/ADA decision from the U.S. Court of Appeals for the Eleventh Circuit, Seff v. Broward County. If you operate in the 11th Circuit states of Alabama, Florida, Georgia, you can follow Seff, but if you operate anywhere else, you’re probably better off trying to follow the EEOC once its proposal becomes final. (I suspect the conflict between the EEOC and the Eleventh Circuit will eventually be resolved in the courts.)
  • Because Title I of the ADA applies only to employers and employees, the EEOC rule does not address inquiries about an employee’s family member who may also be covered under the employee’s health insurance and eligible for participation in a wellness program. Medical inquiries about a family member would, of course, be covered under the Genetic Information Nondiscrimination Act, which is also enforced by the EEOC. The EEOC says it will issue guidance on wellness and the GINA “in future EEOC rulemaking.”
  • The EEOC didn’t include the 50 percent incentive for tobacco programs because, it said, most of those programs do not seek employee medical information at all. If not, there would be no ADA issue. But if a tobacco program does seek such information (for example, through testing for nicotine), then the tobacco program would have to be included in computing the 30-percent limit for incentives.

I am not a wellness nerd. What’ve you got for me? We aim to please.

. . . AND ALSO OF INTEREST . . .

For more on the EEOC’s proposed rule, read Jon Hyman (who also believes the proposal is pretty good) and The Employment Law Navigator, which has been following this issue for a while. And on a completely unrelated topic, but too good not to share: Dan Schwartz posts about what Cosmo teaches us about sexual harassment.

Our good friend Cara Crotty is back with the new (and lower) veteran hiring benchmark for federal contractors.

If you’re in Georgia (either employer or employee), you will definitely want to learn about the new Haleigh’s Hope Act, which allows the use of marijuana extracts to treat certain medical conditions. Thanks in part to the efforts of our own Tommy Eden, some very employer-friendly language was included in the law, so you won’t need to move to South Carolina!

Robin Shea is a Partner with the law firm of Constangy, Brooks, Smith & Prophete, LLP and has more than 20 years’ experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act), the Genetic Information Non-Discrimination Act, the Equal Pay Act, and the Family and Medical Leave Act; and class and collective actions under the Fair Labor Standards Act and state wage-hour laws; defense of audits by the Office of Federal Contract Compliance Programs; and labor relations. She conducts training for human resources professionals, management, and employees on a wide variety of topics.

Robin is Editor in Chief of Constangy’s client publications and author of Constangy’s blog Employment & Labor Insider. You can also follow Robin on Twitter @RobinEShea.

FIND A PROGRAM

Which training method is of interest to you?

FIND A PROGRAM

Which training method is of interest to you?

Skip to content