EEOC Issues Proposed Rules to Clarify Applicability of the Americans with Disabilities Act (ADA) to Workplace Wellness Programs

EEOC Issues Proposed Rules to Clarify Applicability of the Americans with Disabilities Act (ADA) to Workplace Wellness Programs

By Barbara J. Zabawa, JD, MPH

President of the Center for Health Law Equity, LLC

April 17, 2015

On April 16, 2015, the EEOC issued much-anticipated proposed rules regarding how the ADA applies to workplace wellness programs.  Though the rules are not in final form and therefore employers are not required to comply just yet, in a Questions and Answers document the EEOC states that employers are free to comply with the proposed rules to reduce risk until the final rules are issued (which may be later this year).   Here are the highlights of the proposed rules and some important insights:

1.     Alignment with the Affordable Care Act (ACA) incentive rules.  The ADA would permit financial incentives for wellness programs that are part of a group health plan as long as the value of that incentive does not exceed 30% of the total cost of employee-only coverage. 

a.     A few things to note about this proposed provision. 

                                               i.     First, the 30% guidance only applies to wellness programs that are part of group health plans.  The EEOC did not provide any guidance for those programs that fall outside group health plans (and invites comments about that). 

                                             ii.     Second, unlike the ACA incentive rules which do not apply to “participatory” wellness programs, this 30% maximum applies to both participatory programs that involve health risk assessments or biometric screens, as well as health-contingent wellness programs that require participants to satisfy a health factor standard.  The ADA incentive rules would not apply to wellness programs that do not involve disability-related inquiries or medical examinations in order to earn the incentive (such as health assessments or biometric screens) or activity-only wellness programs (as defined by the ACA nondiscrimination rules at 45 CFR § 146.121(f)) without the health assessment or biometric screen. Examples include attending nutrition, weight loss or smoking cessation classes.  However, to the extent the wellness program qualifies as a “health contingent” program as defined by the ACA, such program would need to comply with the ACA incentive requirements.

                                            iii.     Third, the EEOC specifies that the 30% financial incentive maximum applies to both financial and in-kind incentives, such as time-off awards, prizes or other items of value.  

                                            iv.     Fourth, tobacco cessation programs have some special treatment.  The EEOC does not consider tobacco cessation programs that merely ask employees whether they use tobacco and whether they ceased using tobacco upon completion of the program as “disability-related inquiries or medical examinations.”  Therefore, the ACA incentive maximum of 50% of the total cost of employee coverage could apply to those programs.  However, if the tobacco cessation program includes a biometric screen or other medical exam that tests for the presence of nicotine or tobacco, such program would qualify as a medical examination subject to the ADA 30% maximum financial incentive.

2.     Employers may not deny or limit coverage for nonparticipants in an employee wellness program.  This appears to be a reaction to the programs that triggered the recent EEOC lawsuits, which I described in an article published by the American Bar Association Health Lawyer magazine.   Two of the three pending EEOC cases required nonparticipant employees to pay 100% of their health insurance premium.  The third case imposed what the EEOC called “substantial” penalties worth around $2,000 for nonparticipation.

3.     Group health plan wellness programs that collect medical information must provide employees with a notice.  This notice must: 

a.     Be written in a manner that is understandable to the employee;

b.     Describe the type of medical information that will be obtained and the specific purposes for which the medical information will be used; and

c.     Describe the restrictions on the disclosure of the medical information and the methods the employer will use to prevent improper disclosure of the medical information.

4.     Employers and vendors must protect the confidentiality of the health information collected through the wellness program.  The EEOC expects both employers and wellness program vendors to ensure compliance with confidentiality rules, such as set forth in the HIPAA privacy, security and breach notification rules (HIPAA) for group health plans, as well as the rules proposed by the EEOC.  Thus, employee wellness programs that are part of a group health plan must abide by HIPAA rules.  These rules include the requirement for employers who administer wellness programs and who wish to receive from the plan individually-identifiable health information to certify to the group health plan, as provided by 45 CFR § 164.504(f)(2)(ii), that it will not use or disclose the information for purposes not permitted by its group health plan documents and the HIPAA privacy rule.  Those employers that do not administer any part of the employee wellness program could only receive from the group health plan aggregate information that has been de-identified.  To the extent that an employer administers the wellness program, the EEOC strongly suggests as a best practice that the individuals who handle medical information as part of the program should not be responsible for making employment-related decisions.  The EEOC states that use of a third-party vendor may reduce the risk of disclosure of medical information for improper purposes.  Small employers who administer their own wellness programs should not use the information to discriminate on the basis of disability.

5.     The EEOC expects employers and vendors to have clear privacy policies and procedures related to the collection, storage and disclosure of medical information.  Such policies and procedures should include proper training of the individuals who handle medical information.  Policies and procedures should address how to handle breaches of confidentiality.  To ensure compliance with these confidentiality provisions, I strongly suggest employers and vendors conduct an internal assessment of its wellness program and applicable privacy and security requirements.

6.     Like the ACA rules, the ADA would require wellness programs to be reasonably designed to promote health or prevent disease.  A key point the EEOC makes about this provision is that collecting medical information on a health questionnaire without providing employees follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design programs or treat any specific conditions, would not be reasonably designed to promote health.  This supports the pairing of health assessments or biometric screens with wellness coaching efforts.  Further support comes from an FAQ released the same day as the proposed rules the Departments of Labor, Health and Treasury.  The Departments note that a “program that collects a substantial level of sensitive personal health information without assisting individuals to make behavioral changes such as stopping smoking, managing diabetes, or losing weight, may fail to meet the requirement that the wellness program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals.”     

7.     Employers must provide reasonable accommodations.  Regardless of whether a wellness program includes disability-related inquiries or medical examinations, the employer must provide reasonable accommodations, absent undue hardship, to enable employees with disabilities to earn whatever financial incentive an employer offers.  These reasonable accommodations would apply to both participatory and health-contingent wellness programs, as those terms are defined by the ACA.  See 45 CFR § 146.121(f).  The EEOC provides some helpful examples in the interpretive guidance to the proposed rules:

a.     Employers who offer a financial incentive to attend a nutrition class would have to provide a sign language interpreter so an employee who is deaf and who needs an interpreter to understand the information communicated in the class could earn the incentive;

b.     Programs that require reading written materials should provide those materials in large print or on a computer disk for someone with a vision impairment;

c.     Employers that offer rewards for completing a biometric screen that includes a blood draw should provide an alternative test (or certification requirement) so that an employee with a disability that makes drawing blood dangerous can participate and earn the incentive.

8.     Compliance with the proposed ADA rules does not mean compliance with other laws.  The proposed rule mentions specifically that ADA compliance does not translate to compliance with Title VVII, the Equal Pay Act, the Age Discrimination in Employment Act (ADEA), Title II of the Genetic Information and Nondiscrimination Act (GINA) or other sections of Title I of the ADA.  It should be noted that the EEOC had also promised as part of its 2015 rulemaking initiatives to propose rules to align GINA with the ACA.  Those proposed rules have not yet been released.

Because the ADA rules discussed above are in proposed form, the EEOC welcomes comments by Friday, June 19, 2015, particularly with regard to the following issues:

1.      With regard to the financial incentive maximum of 30% of the total cost of employee-only coverage, should the EEOC look at offering additional protections for low-income employees?

2.     Whether to be a “voluntary” wellness program under the ADA, employers should offer similar incentives to persons who choose not to disclose medical information but instead provide certification from a medical professional stating that the employee is under the care of a physician and that any medical risks identified by that physician are under active treatment.

3.     Should the EEOC have the ADA prohibit incentives that render the cost of health insurance unaffordable to employees (using the ACA’s “unaffordability” test of 9.56% or more of an employee’s household income as an example)?

4.     Should the proposed notice requirements also include a requirement that employees participating in wellness programs that include disability-related inquiries and/or medical examinations, and that are part of a group health plan, provide prior, written and knowing confirmation that their participation is voluntary?  If so, what form should such an authorization take?

5.     Should the proposed notice requirement apply only to wellness programs that offer more than de minimis rewards or penalties to employees who participate (or decline to participate) in disability-related inquiries or medical exams?  If so, how should the EEOC define “de minimis?”

6.     Which best practices ensure that wellness programs are designed to promote health and do not operate to shift costs to employees with health impairments or stigmatized conditions?

7.     Whether employers offer (or are likely to offer in the future) wellness programs outside of a group health plan that use incentives to promote participation or achieve certain health outcomes and the extent to which the ADA regulations should limit incentives provided as part of such programs.

8.     What will be the practical effect of adopting specific incentive limits (i.e., the 30% maximum) rather than cross referencing and incorporating the ACA wellness incentive limits?

If you have comments to these or other issues raised by the proposed rule, please submit them directly to the Federal eRulemaking Portal at http://www.regulations.gov.  Follow the instructions for submitting comments.  Recall that comments are due by June 19, 2015.  Alternatively, please feel free to email comments to bzabawa@cfhle.com and we will incorporate them into the Center for Health Law Equity, LLC’s comments. 

As always, the Center for Health Law Equity, LLC aims to be the premier legal resource for the wellness industry.  If you have any questions or concerns about the proposed rules or any other wellness law matter, please do not hesitate to contact us.