The regulations are a win for employers, but there is still important work to be done during the comment period.
On April 17, the Equal Employment Opportunity Commission (EEOC) released proposed regulations under the Americans with Disabilities Act (ADA) that will provide long-awaited guidance concerning the extent to which employers may use incentives to encourage employees to participate in wellness programs. In many respects, the proposed regulations are a win for employers because the regulations are much more accepting of wellness programs than the EEOC’s position in its prior wellness program litigation against employers. However, the proposed regulations are more restrictive in a number of respects than the wellness regulations issued under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). Employers will likely request that the EEOC make changes to ensure that these proposed regulations are truly consistent with HIPAA and the ACA.
Self-insured employers and insurers are increasingly implementing wellness programs as part of their group health plans to promote a healthier workforce and to lower healthcare and insurance costs. These wellness programs often include incentives to encourage employee participation, and they also sometimes include incentives that encourage employees to achieve certain health outcomes. Such wellness programs are governed by federal employee benefits laws, including ERISA, HIPAA, and the ACA. In addition, wellness programs must comply with federal antidiscrimination laws, including the ADA.
Because wellness programs typically include a health questionnaire and/or biometric screening, the ADA’s limitations on employer health-related inquiries may be implicated. Under the ADA, employers are permitted to make health-related inquiries or to require employees to undergo medical examinations in certain limited situations.
The ADA contains an insurance safe-harbor provision that exempts bona fide employee benefit plans from the ADA’s limitations on health-related inquiries and medical examinations (See 42 U.S.C. § 12201(c)(2); Seff v. Broward Cnty., 691 F.3d 1221, 1223 (11th Cir. 2012)). In addition, even if a wellness program does not fall within this safe harbor, an employer is still permitted under the ADA to use health questionnaires and biometric screening as part of a wellness program so long as participation is “voluntary” (See 42 U.S.C. § 12112(d)(4)(B)). The proposed regulations address the incentives that employers can offer to satisfy the “voluntary” standard.
Prior to issuing these regulations, the EEOC had instituted litigation against multiple employers related to their wellness programs. The EEOC was criticized by both employer representatives and Republicans in Congress for doing so prior to issuing formal guidance on this topic.
The proposed regulations would apply to wellness programs that are part of an insured or self-insured group health plan. The proposed regulations contain the following key provisions, many of which will need to be further explored during the comment period:
The EEOC has specifically requested employer comment on several important issues, including the following:
The breadth of the topics upon which the EEOC seeks input underscores the importance of employer feedback in this notice process.
Employers may recall that prior guidance concerning family medical history in Health Risk Assessments caused a late-year scramble to ensure plan design compliance. Employers should be cognizant that they unfortunately may face a similar situation concerning these proposed regulations. Decisions concerning plan design for 2016 typically will be made in mid-2015, without the benefit of final regulations. The EEOC has stated that compliance with the proposed regulations will be treated by the EEOC as compliance with the ADA, pending the issuance of final regulations. However, if the EEOC issues its final regulations in late 2015 with a January 1, 2016 effective date, employers may again find themselves rushing to make last-minute changes to plan design to conform to any additional flexibility permitted under the final regulations.
Comments on the proposed regulations must be submitted on or before June 19, 2015.
On the same day that the EEOC issued its proposed regulations, the three agencies (Tri-Agencies) responsible for ACA guidance—the Department of Labor, the Department of Health and Human Services (HHS), and the Internal Revenue Service—issued two additional FAQs under the ACA regarding wellness programs. The FAQs provide that a wellness program that complies with the ACA must be “reasonably designed,” which means that it (1) must have a reasonable chance of improving the health of, or preventing disease in, participating individuals; (2) is not overly burdensome; (3) is not a subterfuge for discrimination based on a health factor; and (4) is not highly suspect in the method chosen to promote health or prevent disease. Like the EEOC, the Tri-Agencies affirmed that a wellness screening program that does not provide data to employees or offer them programs intended to manage health-risk factors is not “reasonably designed.” The FAQs also reinforce the view that compliance with HIPAA/ACA wellness rules does not necessarily constitute compliance with other federal laws, including the ADA.
The HHS Office of Civil Rights also issued on the same date guidance affirming that information gathered through a biometric screening or a health-risk assessment under a wellness program that is part of an employer group health plan is “protected health information” subject to HIPAA’s privacy and security rules.
Finally, the Centers for Medicare and Medicaid Services issued FAQs effective January 1, 2016 regarding wellness programs applicable to health insurers subject to the single risk-pool requirements for rates. Among other things, those FAQs prohibit insurers from choosing only certain employer groups for the offering of wellness incentives (e.g., office workers but not employees who perform physical labor).
The proposed ADA wellness regulations—which represent a radical departure from the EEOC’s position in litigation last year—combined with the simultaneous issuance of the additional guidance by the four other federal agencies responsible for regulating wellness programs, make clear that the Obama administration wants to signal strong support for employer and insurer wellness initiatives. Although all this guidance represents a welcome step in the right direction, the EEOC’s proposed ADA regulations are still more restrictive than the HIPAA/ACA regulations and are applicable to one of the fundamental building blocks of any wellness program—screenings designed to identify health risks that can be managed under the program. We hope that the EEOC will respond positively to expected comments requesting that its final regulations move further in the direction of harmonizing all of the agency guidance regarding wellness programs.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Employee Benefits Contacts
Craig A. Bitman
Labor and Employment Contacts
Lisa Stephanian Burton
Anne Marie Estevez
Christopher K. Ramsey
Grace E. Speights
. The proposed regulations do not address how, if at all, the rule applies to incentives offered to family members for participation in wellness programs. The EEOC has taken the position in litigation that Title II of the Genetic Information Nondiscrimination Act of 2008 prohibits employers from offering incentives for family member participation in wellness programs. The EEOC has stated in its proposed regulations that future EEOC rulemaking will address this issue.