Not a Member? Get access to HR news and resources that you can trust.
Don't leave the task of calculating total cost of workforce to the finance department.
Is your employee handbook ready for the changing world of work? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
60+ new SHRM Seminar dates in 10 U.S. cities and virtually.
Expand your influence and learn how to become an effective leader -- Join us in Phoenix, AZ, October 2-4, 2017.
The Equal Employment Opportunity Commission (EEOC) has acknowledged two key differences between its April 20, 2015,
proposed rule on wellness programs and the Americans with Disabilities Act (ADA), as compared to existing Health Insurance Portability and Accountability Act (HIPAA) requirements. One difference is the permitted percentage of incentives for wellness programs and the other is a notice requirement.
HIPAA’s nondiscrimination provisions discuss participatory and health-contingent wellness programs. The provisions were previously amended by the Affordable Care Act (ACA), and the ACA changes were implemented by the final regulations issued in 2013 by the Departments of Labor (DOL), Treasury, and Health and Human Services.
The EEOC has separately provided parameters on incentives to help define what makes a wellness program voluntary and therefore, makes a disability-related inquiry or medical exam under the ADA permissible. The ADA generally prohibits both. As the EEOC explains, “Placing limits on the rewards employers may offer for employee participation (or penalties for nonparticipation) where participation requires employees to answer disability-related inquiries or take medical examinations promotes the ADA’s interest in ensuring that incentive limits are not so high as to make participation in the program involuntary.”
EEOC’s proposed rule differs from HIPAA’s wellness program incentives “in that it extends the 30 percent limit on incentives under health-contingent wellness programs to participatory wellness programs. HIPAA places no limits on incentives for participatory wellness programs,” the EEOC noted.
“Participatory wellness programs are not related to a health factor or achieving a result in relation to a health factor. Health-contingent wellness programs are,” said Frank Morris Jr. and Adam Solander, attorneys with Epstein, Becker & Green in Washington, D.C., in an e-mail. Under the EEOC’s proposed rule, unlike the HIPAA regulations, the 30 percent limit is for 30 percent of self-only coverage, not 30 percent of family coverage, even where the coverage is for a family, Morris also observed in an April 22, 2015, firm webcast.
The EEOC does not believe the change will have a big impact. “As the incentives offered by the vast majority of employers currently fall below the limit of 30 percent of the cost of self-only coverage, the commission does not believe the rule will negatively affect the ability of employers to offer incentives sufficient to promote meaningful participation in wellness programs.”
Morris and Solander said the change “seems particularly odd as there is very little likelihood for any abuse with regard to participatory wellness programs.”
“Not all wellness programs require disability-related inquiries or medical examinations in order to earn an incentive,” the proposed rule notes. “Examples may include attending nutrition, weight loss or smoking cessation classes. These types of programs are not subject to the ADA incentive rules discussed here, although programs that qualify as health-contingent programs are subject to HIPAA incentive limits.”
Regulations implementing HIPAA’s wellness provisions, as amended by the Affordable Care Act, allow covered entities to offer incentives as high as 50 percent of the total cost of employee coverage for tobacco-related wellness programs, such as smoking cessation programs.
But a biometric screening or other medical examination that tests for the presence of nicotine or tobacco is a medical examination that would be subject to the 30 percent cap under the proposed rule.
The proposed rule will cause a recalculation of limits among employers that offer wellness programs, noted J.D. Piro, the lead health group officer and senior vice president of Aon Hewitt in Norwalk, Conn.
“If finalized, the rule could result in employers removing the testing requirement from the tobacco cessation components of their wellness programs if they wish to offer a reward that is greater than 30 percent of the cost of employee-only coverage,” said Peter Marathas and Stacy Barrow, attorneys in Proskauer’s Boston office, in an e-mail.
Debra Friedman, an attorney with Cozen O’Connor in Philadelphia, observed that the 30 percent cap for medical exams testing for the presence of nicotine was included because “any wellness program that requires disability-related inquiries or medical examinations must be voluntary, as defined in the proposed rule. … [A]ny incentive must not be so high as to possibly constitute economic coercion that could render the provision of medical information involuntary.”
She added, “If this provision remains in the final rule, employers will need to evaluate what information is required for employee participation in the tobacco cessation program. Employers may choose to restructure any programs that currently require disability-related inquiries or medical examinations if they want to offer incentives greater than 30 percent, and up to 50 percent, of the total cost of employee-only health insurance coverage.”
In addition to the new limits, the proposed rule recommends additional paperwork.
Employers with wellness programs will be required to provide a notice to employees informing them:
The EEOC also asked whether prior, written and knowing confirmation that employees’ participation in a disability-related inquiry and/or medical examination be required. “If so, what form should such an authorization take?” the EEOC asked.
Solander said during the webcast that this additional form “could inject a lot of complexity into the wellness program.” He said employers already have “a hard enough time getting employees to sign any document,” and predicted that such a form would make it “more difficult to get employees enrolled in wellness programs.”
Morris and Solander recommended the following changes to the proposed rule:
Marathas and Barrow noted that “One major disconnect between existing DOL guidance on wellness programs and the EEOC’s proposed rule is that the EEOC continues to prohibit employers from requiring that employees complete a health risk assessment (HRA) in order to enroll in the plan. The DOL has permitted this practice for years, as long as results of the HRA are not used for eligibility purposes. We’d recommend that the EEOC allow employers to require completion of an HRA and biometric screening in order to be eligible in group health plan coverage.”
Comments are due June 19, 2015.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies