Well, well, well: some new guidance

On April 20, the Equal Employment Opportunity Commission issued a notice of proposed rulemaking addressing how the Americans with Disabilities Act applies to employer wellness programs that are part of a group health plan. Wellness programs, which are otherwise regulated under employee benefits laws including HIPAA, the ACA, GINA and (sometimes) ERISA have long remained an open question under the ADA. The EEOC's proposed regulations, together with the FAQs from other agencies, would provide some welcome clarity, but open questions continue to require employers to tread a careful line.

What is a wellness program?

A wellness program can be a slew of different things from an informal poster encouraging employees to take walks during lunch to a complex scheme involving computerized health risk assessments (possibly including disability-related inquiries) and medical exams with individualized follow-up where the assessments reveal a potential health risk.

Employers have long been drawn to wellness programs because they have been linked to decreased health costs as well as associated costs, like absenteeism and presenteeism. Typically, employees are granted a discount on their health insurance premiums or given another type of financial reward for participating in the employer's wellness program.

On its face, the ADA permits wellness programs to include disability-related inquiries or medical examinations only if participation in the program is voluntary, the confidentiality of information is maintained, and the information is not used to discriminate against an employee. However, the question of whether and when a program is in fact voluntary under the ADA has long been a point of confusion.

Recent EEOC challenges

The EEOC's recent proposed regulations come on the tail of three separate EEOC lawsuits based on alleged wellness program violations and may have been the result of congressional pressure to provide some clarity to employers. In two of the three pending lawsuits, the EEOC alleged that an employer violated the ADA through improper design of a wellness program. In each of these suits, the EEOC appeared to be taking the position that wellness programs with disability-related inquiries would violate the ADA's voluntariness requirement if they included any incentive for participation. However, the EEOC's proposed regulations take a softer view of the issue.

Proposed regulations and FAQs

The EEOC's proposed regulations address the voluntariness component of wellness programs head on by laying out specific rules for when and how an employer can offer a program that includes disability-related inquiries or medical exams. In relevant part, the proposed regulations provide the following:

- Wellness programs do not fall under the bona-fide benefit plan safe harbor within the ADA, so employers are at risk of violating the ADA if they improperly design their wellness programs.

- Where a wellness program includes a disability-related inquiry or medical examination, the benefit under the program cannot exceed 30 percent of the cost of employee-only coverage. This is in contrast to HIPAA and the ACA, which allow programs that benefit dependents of an employee to offer rewards up to 30 percent of the cost of family coverage.

- The proposed ADA regulations do not allow for higher tobacco-related incentives unless the program does not include a disability-related inquiry or medical examination (like a test for nicotine).

- Employers would be prohibited from requiring participation in a wellness program, denying or limiting coverage where an employee refuses to participate in a wellness program, or taking adverse action against an employee who either does not participate in a wellness program or fails to achieve a health outcome.

- The proposed regulations also would require employers to provide a notice to employees explaining details about most wellness programs.

The EEOC would impose confidentiality requirements that limit the data that may be communicated to an employer, where the employer does not administer the health plan internally.

- Finally, the proposed regulations include the requirement that the wellness program be reasonably designed to promote health or prevent disease. This requirement has been liberally construed with regard to the HIPAA regulations.

In conjunction with the timing of the EEOC's release of the proposed regulations, several administrative agencies published FAQs addressing limited aspects of wellness program design and administration. In particular, the FAQs addressed reasonable requirements in wellness programs, reinforced the fact that compliance with one set of regulations governing wellness programs is not determinative of compliance with other wellness program regulations, and addressed how HIPAA's breach notification rules apply to wellness programs.

What now?

The comment period on the EEOC's proposed regulations ends on June 19, 2015, and we expect to see extensive comments from employers and human resources groups regarding the existing conflicts between the EEOC's proposed regulations and other law governing wellness programs, but we do not yet know the effective date of the final regulations.

For now, employers should take this time to review their existing wellness programs and determine whether any existing programs contain disability-related inquiries or medical examinations. Where they do, employers should work with their attorney to determine whether the programs are compliant with the proposed regulations, and where they are not compliant, conduct a cost-benefit analysis to determine whether to adjust existing programs now or wait for the final regulations. The safest approach at this point is to design new wellness programs to comply with the proposed regulations, but some employers may prefer to hold off on new wellness program design until final regulations are released because doing so will avoid the risk of an immediate redesign.

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Iris Tilley is a partner at Barran Liebman LLP. She advises employers about all aspects of employee benefits, including health care. Contact her at 503-276-2155.

Published: Wed, May 27, 2015

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