The Equal Employment Opportunity Commission, (EEOC) recently released its Final Rule on Employer Wellness Programs and Title I of the Americans with Disabilities Act, (ADA). The final rule states that employers may provide limited financial and other incentives in exchange for an employee answering disability-related questions or taking medical examinations as part of a wellness program, whether or not the program is part of a health plan.
There are two main types of wellness programs, employer provided and health plan sponsored. Each type of program and any associated initiatives could be subject to regulations under the Health Insurance Portability and Accountability Act, (HIPAA) the Americans with Disabilities Act, (ADA), the Affordable Care Act, (ACA), and/or the Equal Employment Opportunity Commission, (EEOC).
Both employer provided and health plan sponsored programs can be in one of two forms, “health-contingent” or “participatory”. Health-contingent programs are typically associated with health plans and require an employee to attain a certain goal such as walking a certain number of steps per day or lowering cholesterol, in order to receive a reward for achievement or penalty for failing to meet the goal, such as higher premium costs to the employee.
Health-contingent wellness programs are further divided into Activity-only and Outcome-based programs, which must meet the following criterion:
- Frequency of opportunity to qualify – Employees must be given the opportunity to qualify for the reward at least once per year
- Size of reward – The total incentive cannot exceed 30 percent of the total cost of employee-only coverage under the health plan, including both employee and employer contributions. If employees’ dependents are eligible to participate in the program, the reward cannot exceed the percentage of the total cost of coverage in which the employee and any dependents are enrolled. Incentives or disincentives may be up to 50 percent for wellness programs designed to prevent or reduce tobacco use
- Reasonable design – The program must be reasonably designed to promote health or prevent disease. A program must have a reasonable chance of improving health or preventing disease, can’t be overly burdensome, must not discriminate or seek to discriminate based on a health factor, and must not be used as a way to shift costs from an employer to employees or for employers to predict their future healthcare costs
- Uniform availability and reasonable alternative standard – the full reward must be available to all similarly situated individuals
- Notice of availability of reasonable alternative standard – Plans must state that a reasonable alternative standard is available (or that the original standard could possibly be waived) and that the recommendations of an employee’s physician will be accommodated. Contact information also must be provided
Participatory programs are those that do not require a person to achieve any type of stated outcome but allow employees to participate in activities such as a nutrition education seminar or completing a HRA, and must meet the following requirements to be considered “voluntary” under the rule:
- may not require any employee to participate;
- may not deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan; and
- may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
Additionally, employers are required to provide employees with notice of what medical information will be collected, how it will be used, who receives the information, and restrictions for disclosure. A new notification is not needed if the organization already provides the required information in an email or brochure stating the details of the wellness program.
Confidentiality requirements under the ADA apply to information from or created about employees, obtained through participation in wellness programs. Though the final rule did not change any language to the existing confidentiality provisions of the ADA, it did add two new requirements;
- A covered entity only may receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals except as is necessary to administer a health plan
- An employer may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information, or to waive confidentiality protections under the ADA as a condition for participating in a wellness program or receiving an incentive for participating, except to the extent permitted by the ADA to carry out specific activities related to the wellness program
Wellness programs sponsored by group health plans are required to adhere to both the EEOC confidentiality requirements and HIPAA's privacy, security, and breach notification rules to protect information collected from or created about participants that can be used to identify them. By adhering to the HIPAA requirements, organizations typically meet their obligations under the EEOC’s Final Rule, which takes effect on January 1, 2017.
