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Commentary: Wellness programs must adhere to multiple masters

Regulations published by the Equal Employment Opportunity Commission (EEOC) that describe how employers offering workplace wellness programs can comply with the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) went into effect Jan. 1.

ADA rules

The ADA generally restricts employers from making disability-related inquiries or from requiring employees to submit to a medical examination. An exception to the restriction applies to voluntary employee health programs, including wellness programs. The regulations set forth a number of factors necessary to demonstrate that a wellness program is voluntary, taking the position that employer incentives (or penalties) that encourage employees to participate in a wellness program can render a plan “involuntary” if they are too high.

The EEOC regulations provide that incentives (such as reducing the amount an employee is required to pay for employer-provided medical coverage) or penalties (such as imposing an additional charge on the employee for coverage) are acceptable as long as the incentive (or penalty) does not exceed an amount equal to 30 percent of the total cost (both employer and employee portions) for coverage for the employee, excluding the costs of covering the employee’s family. Special rules apply to determine the applicable cost if an employee offers multiple health plans or no health plan.

GINA rules

The EEOC’s GINA regulations impose limitations on wellness programs that offer an incentive/penalty for a participant’s spouse to provide medical history through a health risk assessment or through other means. The maximum incentive/penalty is 30 percent of the total cost for employee-only coverage (with special rules if an employer offers multiple health plans or no health plan).

Thus, the maximum combined total incentive/penalty for the participation of an employee and spouse in a wellness program cannot exceed 60 percent of the total cost for employee-only coverage.  No incentive or penalty can be utilized to encourage the provision of information about an employee’s child.

HIPAA/ACA Rules

In addition to complying with the EEOC wellness regulations, employers must also comply with existing regulations issued under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). The HIPAA/ACA rules categorize wellness programs into two types: (1) participatory programs (such as programs involving completion of a health risk assessment or attending a smoking cessation class) that do not require an individual to satisfy any goal relating to a health factor, and (2) health-contingent wellness programs – that is, programs that offer rewards (or impose penalties) to employees who satisfy a goal relating to a health factor (for example, exercise programs, lowering cholesterol, discounts for non-smokers).

The HIPAA/ACA rules limit the maximum incentive/penalty that can be offered under a health-contingent wellness program to an amount equal to 30 percent of the total cost for employee-only coverage (50 percent for tobacco-related programs).  They do not impose restrictions on participatory wellness programs.

Interplay the rules

Unlike the HIPAA/ACA rules, the EEOC regulations do not distinguish between wellness programs that are participatory or health-contingent. Rather, the EEOC regulations apply to all wellness programs that request health information or impose a medical examination, including participatory wellness programs. Thus, the EEOC regulations impose a 30 percent incentive/penalty limitation on a program that reduces the employee’s cost of purchasing employer-provided medical coverage if the employee completes a health risk assessment, whereas the HIPAA/ACA rules do not impose any limitations on such an arrangement.

Another significant difference between the EEOC regulations and the HIPAA/ACA rules relates to tobacco-related wellness programs. As noted above, the HIPAA/ACA rules allow an employer to offer a 50 percent incentive/penalty to participate in a tobacco-related, health-contingent wellness program. In contrast, the EEOC regulations generally limit incentives/penalties under wellness programs (including tobacco-related programs) to 30 percent.

However, the EEOC regulations only apply if the tobacco-related program asks disability-related questions or requires a medical examination (such as a nicotine test). The EEOC’s position is that a program that merely asks employees whether or not they smoke or whether they stopped smoking upon completion of a smoking cessation program does not involve a disability-related question or medical examination.

Other elements

How a tobacco-related wellness program is structured is critical to determining whether the EEOC and/or HIPAA/ACA restrictions apply. For example, a wellness program that reduces the amount an employee must pay for employer-provided medical coverage if the employee certifies he or she does not smoke is not subject to the EEOC regulations.  In that case, the HIPAA/ACA rules limiting the incentive/penalty to an amount equal to 50 percent of the total cost for employee-only coverage apply.

A different result applies if the employee is required to take a test to confirm nonsmoker status.  Because a test confirming non-smoker status is a medical examination under the ADA, the more restrictive EEOC regulations limit the incentive/penalty to an amount equal to 30 percent of the total cost for employee-only coverage.

In addition to imposing limits on incentives and penalties, the EEOC regulations address other elements of what constitutes a voluntary wellness program, including confidentiality requirements and participant notice provisions. The EEOC has posted a sample notice on its website, as well as a question-and-answer document describing the notice requirement and how to use the sample notice.

Barry F. Rosen is the chairman and CEO of Gordon Feinblatt LLC in Baltimore, where heads the firm’s Health Care Practice Group. He can be reached at 410-576-4224 or brosen@gfrlaw.com.  Mary L. Porter is counsel in Gordon Feinblatt’s ERISA and Benefits Practice Group and can be reached at 410-576-4003 or mporter@gfrlaw.com.

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