Adjusting Wellness Programs for Compliance

EEOC has more antagonistic view of wellness programs than other agencies

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The Equal Employment Opportunity Commission's (EEOC's) recent regulatory actions with regard to wellness programs have been far more aggressive than the actions taken by the other governing agencies, according to Adam Solander, an attorney with Epstein Becker & Green's health care and life sciences practice group in Washington, D.C.

The Internal Revenue Service, Department of Labor, and Department of Health and Human Services—the "tri-agencies" —worked together to develop regulations for wellness program.

The EEOC also regulates wellness programs, but it "has a much more antagonistic view" of these programs than the other agencies, Solander said in a July 26 session at the National Employee Well-Being Congress in Alexandria, Va.

EEOC Issues Final Rules


The EEOC regulates wellness programs through its enforcement of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), Solander explained.

Under the ADA, employers may not make disability-related inquiries or require employees to undergo medical examinations unless they are "job-related and consistent with business necessity" or part of a voluntary wellness program.

Until recently, Solander said, there was very little guidance on what "voluntary" meant.

The EEOC said in guidance from 2000 that "a wellness program is voluntary as long as an employer neither requires participation nor penalizes employees who do not participate."

In May, the agency issued two final rules that offer additional guidance to employers about how their wellness programs can comply with the ADA and GINA. The rules will take effect for plan years beginning on or after Jan. 1, 2017.

The final rules "govern the extent to which employers may use incentives to encourage participation in wellness programs connected to group health plans without being considered involuntary," Solander said.

Employers may offer a reward or impose a penalty as long as it doesn't exceed 30 percent of the total cost of employee-only coverage. 

Solander noted that the rule conflicts with the tri-agency regulations, which permit incentives of up to 30 percent of the total cost of family or dependent coverage.

Under the ADA final rule, wellness plans may include disability-related inquires, in the form of health risk assessments (HRAs) or biometric testing, as long as participation is voluntary.

Additionally, the GINA final rule permits employers to offer incentives if an employee's covered spouse provides certain health information as a part of an HRA.

Programs Must Be Voluntary


The EEOC has made clear that, in order for a wellness program to be voluntary, the employer must not require participation or deny or limit coverage under its group health plan for nonparticipating employees.

In order to ensure that participation is voluntary, Solander explained, employers must provide notice to employees explaining what medical information will be obtained, who will receive it and how it will be used. The notice must describe the employer's restrictions on disclosing the information and the steps the employer will take to prevent impermissible disclosure.

Solander noted that the EEOC has a sample ADA notice posted on its website.

To be compliant with the ADA as well as other regulations, wellness programs must be "reasonably designed to promote health or prevent disease." Furthermore, they can't be "overly burdensome" or created as a "subterfuge" for violating any anti-discrimination law.

Wellness Program Litigation


The EEOC has brought several lawsuits challenging certain aspects of employee wellness programs, Solander said. "What the courts have said unanimously is that under the ADA, employers are allowed to offer wellness programs."

In EEOC v. Flambeau Inc., the U.S. District Court for the Western District of Wisconsin held that an employer's requirement that employees complete HRAs and biometric screening to receive employer-provided health coverage fell within the ADA's "safe harbor" provision.

The safe harbor provides an exemption for wellness program activities when they are related to a bona fide employee benefits plan and are based on underwriting, classifying or administering risk.

The EEOC has appealed the Flambeau decision to the 7th U.S. Circuit Court of Appeal.

Even though several courts have ruled to the contrary, the EEOC continues to take the position that the ADA safe harbor provision doesn't apply to wellness programs, Solander said. There may be more EEOC lawsuits brought over the application of those safe harbor provisions to wellness programs.

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