Last year, the EEOC sued three different employers (Honeywell, Orion and Flambeau),1 claiming that the companies’ workplace wellness programs violated the Americans with Disabilities Act. Except for the EEOC’s court papers in these cases, employers have had little guidance on the ADA’s requirements for wellness programs. On April 20, 2015, the EEOC finally revealed its position.
The EEOC’s proposed rule applies to employers with 15 or more employees that offer workplace wellness programs that include disability-related inquiries or medical exams. According to the proposed rule, covered wellness programs must be reasonably designed to promote health or prevent disease. Further, covered wellness programs must be voluntary. That is, the employer: (1) may not require employees to participate; (2) may not deny coverage under any of its group health plans for non-participation (or limit benefits except as specifically allowed in the regulation); (3) may not take adverse employment action or retaliate against employees who do not participate; and (4) if the program is part of a group health plan, must provide a detailed notice with information about the program. The notice must be reasonably likely to be understood by employees, describe the medical information that will be obtained and how it will be used, and describe confidentiality measures and restrictions on disclosure of medical information collected.
The proposed rule approves incentives or penalties that do not exceed 30% of the total cost of employee-only health plan coverage, so long as the tests for voluntariness are met. Reasonable accommodations must be offered to enable employees with disabilities to participate in the employee wellness program and earn any reward (or avoid any penalty) that is part of the plan.
Medical information collected through a workplace wellness program may only be provided to the employer in aggregate terms that do not disclose the identity of specific individuals. There is an exception to this provision when further disclosure is required to administer the health plan. In addition, employers are still permitted to inform supervisors or managers regarding work restrictions and accommodations, and to inform safety and first aid personnel as needed to render assistance in an emergency.
Do some of the provisions of the proposed rule sound familiar? If so, it’s likely because the EEOC attempted to be consistent with existing Health Insurance Portability and Accountability Act (HIPAA) and Patient Protection and Affordable Care Act (ACA) wellness plan regulations. But there are important differences among the laws. For example, the proposed rule imposes a 30% of employee-only cost of coverage limitation on both health contingent and participatory wellness program incentives, whereas HIPAA and the ACA impose no limitations on incentives for participatory plans. And, unlike HIPAA and the ACA, the proposed rule would not permit a 50% of employee cost of coverage incentive for tobacco-related wellness programs that include disability-related inquiries or medical exams (such as a blood screen that tests for the presence of nicotine). Further, HIPAA imposes numerous confidentiality rules that are beyond the scope of the proposed ADA regulation.
The new proposed rule provides much-needed clarity about the ADA’s requirements for wellness programs, but it is just a small piece of the workplace wellness plan puzzle. Employers must continue to analyze, understand and comply with all applicable laws (such as HIPAA, ACA, ERISA, and GINA) in conjunction with their wellness programs.
1 In a footnote to the discussion preceding the text of the proposed rule, the EEOC states that it does not interpret the ADA’s “safe harbor” provision (42 U.S.C. 12112 (d)(4)(B)) to apply to wellness program incentives. The “safe harbor” defense was asserted by the defendants in the EEOC’s recent wellness plan litigation, so stay tuned to see whether the courts agree with the EEOC on this point.