EEOC Issues Proposed Rule Addressing Employer Wellness Programs and the ADA

by Bond Schoeneck & King PLLC

On April 20, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued a proposed rule to amend the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (“ADA”) as it relates to employer wellness programs.  The EEOC also issued a Fact Sheet for Small Business and a Q&A regarding the proposed rule.

By way of background, Title I of the ADA prohibits employment discrimination on the basis of disability.  This non-discrimination provision applies to compensation and other terms, conditions, and privileges of employment, including fringe benefits, whether or not administered by the employer.  It also limits the medical information that employers may obtain from employees and applicants.  The ADA, however, does permit employers to conduct medical examinations and inquiries, including voluntary medical histories, when it is part of a voluntary employee health program.  The EEOC’s proposed rule is intended to provide guidance to employers on the extent to which the ADA permits employers to offer incentives to employees to promote participation in wellness programs that are employee health programs.

What is a wellness program and when would it be considered  an employee health program?

A wellness program is a program or activity that is typically offered through employer-provided health plans to help employees improve their health with the goal of lowering health care costs.  Wellness programs often encourage employees to become more active, quit smoking, eat better, etc., by offering monetary or other rewards or incentives for doing so.  Some wellness programs obtain medical information from employees by asking them to complete health risk assessments or undergo biometric screenings.

According to the proposed rule, a wellness program could be considered an employee health program if it is reasonably designed to promote health or prevent disease.  In other words, it must:  (1) have a reasonable chance of preventing disease and improving the health of participating employees; (2) not be overly burdensome; (3) not be a subterfuge for violating the ADA or other employment discrimination laws; and (4) not be highly suspect in the method chosen to promote health and prevent disease.

When would participation in a wellness program be considered voluntary?

A wellness program that includes disability-related inquiries or medical examinations would be considered voluntary as long as the employer:  (1) does not require employees to participate; (2) does not deny access to health coverage or limit the extent of benefits for employees who do not participate; (3) does not take adverse action, retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate in the program or who do not achieve certain outcomes; and (4) provides written notice to employees (when the wellness program is part of a group health plan) that describes the medical information that will be obtained, the purposes for which it will be used, who will receive it, and how it will be safeguarded.

Does the use of incentives to encourage employees to participate in a wellness program render it involuntary?

No.  The EEOC takes the position in its proposed rule that the use of incentives, whether in the form of reward or penalty, will not render the program involuntary as long as the maximum allowable incentive available under the program does not exceed 30 percent of the total cost of employee-only coverage.  For example, if the total cost of employee-only coverage is $5,000, the maximum incentive for an employee under the plan cannot exceed $1,500.  This is consistent with the maximum allowable incentive amount under the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act health-contingent wellness programs.

Will medical information gathered as part of an employee’s participation in wellness programs be kept confidential?

Yes.  The EEOC proposes adding a new subsection to its regulations relating to confidentiality to ensure that medical information collected through participation in employee health programs will only be provided to employers in aggregate terms and will not disclose (or be reasonably likely to disclose) the identity of any specific employee.

While we await issuance of a final rule, here are a few steps that employers can take to ensure that their wellness programs comply with the ADA:

  • Confirm that wellness programs are reasonably designed to promote health or prevent disease.
  • Audit the incentives offered under wellness programs to ensure that they do not exceed 30 percent of the total cost of employee-only coverage.
  • Ensure that employee participation in wellness programs is voluntary.
  • Provide reasonable accommodations to enable employees with disabilities to participate in wellness programs and earn whatever incentives are offered.
  • Ensure that medical information is maintained in a confidential manner, which includes training employees on handling confidential medical information, encryption of electronic medical information, and prompt reporting of breaches.
  • Establish a written notice to employees regarding the collection of medical information.
  • Do not deny health insurance or limit the extent of benefits to employees who choose not to participate in wellness programs.
  • Do not take adverse action, retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate in wellness programs or who do not achieve certain outcomes.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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