After much silence, some litigation, and recent congressional hearings, the Equal Employment Opportunity Commission (EEOC) has at long last proposed regulations (together with a fact sheet and set of frequently asked questions and answers) that interpret how the Americans with Disabilities Act (ADA) applies to wellness program incentives. Employers that sponsor wellness programs are likely to greet these regulations with a mixture of relief and concern. To a significant degree, the regulations dovetail with guidance on wellness program incentives issued under other nondiscrimination laws, in particular, the Health Insurance Portability and Accountabilty Act (HIPAA) and the Affordable Care Act (ACA). However, they differ in ways that could materially affect how employers design and operate their wellness programs.

Perhaps most significantly, the regulations provide for the same basic limit on the size of an incentive that is set forth under HIPAA and the ACA. The total incentive for participating in one or more wellness programs sponsored by an employer may not exceed 30 percent of the cost of self-only health coverage for an employee. However, the new limit does not line up exactly with the HIPAA/ACA rules. In particular:

• The HIPAA/ACA limit applies only to health-contingent wellness programs in a health plan, where the incentive is, at least initially, predicated on the achievement of a particular health outcome (like a cholesterol reading below a prescribed level) or participation in an activity that is related to an individual’s health (like walking a mile three days per week). The EEOC limit applies to wellness programs across the board. In particular, it applies to a participatory wellness program, which provides incentives simply for participating in an activity that does not depend on an individual’s health (such as a program that provides incentives for completing a health questionnaire or undergoing certain medical screenings).
• If family members can participate in a wellness program, the HIPAA/ACA limit may be based on the cost of the coverage tier selected by the employee (self-only, employee plus one, etc.). The ACA rules base their limit exclusively on the cost of self-only coverage.
• The HIPAA/ACA limit may be expanded to 50 percent of the cost of group health coverage to the extent that the wellness program addresses tobacco cessation. The EEOC limit does not allow for that extension. The EEOC explains that its limit would not apply at all to a smoking cessation program that merely asks about an individual’s tobacco use because that would not be seen as a disability-related question or medical exam, which is the focus of the ADA’s rules. However, the EEOC limit would presumably apply to a program that relies on medical screenings.

The new regulations set forth a number of other requirements for wellness program incentives. For example, the new rules require an employer to provide notice that explains the medical information that will be collected, who will receive the information, how the information will be used, how disclosure of the information will be restricted, and what measures have been taken to prevent improper disclosures. Also, an individual’s participation in a wellness program must be voluntary. It cannot serve as a condition for participating in a group health plan, and employers may not coerce participation in the wellness program, for example, through intimidation or retaliation.

The new rules also settle a number of questions about EEOC positions. For example, the rules clearly apply to all incentives, whether they come in the form of a penalty or a reward. However, the regulations do not address all issues that have surfaced regarding the EEOC’s position on wellness programs. In particular, the rules apply to the ADA but not other statutes, such as the Genetic Information Nondiscrimination Act and its rules regarding family medical history.

The new regulations are only proposed at this time. The EEOC has specifically requested comments on a number of issues and will generally receive comments until June 19, 2015.