EEOC Releases Wellness Program Guidance

Written by Eva A. Rasmussen

The Equal Employment Opportunity Commission recently published proposed regulations under the Americans with Disabilities Act ("ADA") that provide guidance on compliance with the ADA for employee wellness programs. The ADA generally prohibits employers from asking employees about their health or requiring them to have medical examinations. However, there is an exception if the inquiries and exams are part of a voluntary employee health program. A compliant program must be reasonably designed to promote health or prevent disease, must not be unduly burdensome on the employees and must not be a subterfuge for violating the ADA which prohibits discrimination against employees with disabilities.

Wellness programs are programs and activities generally offered through an employer sponsored health plan designed to encourage employees to improve their health. The programs consist of two types: (i) participating programs that require an employee to participate in a program such as nutrition classes, but do not require satisfaction of a health related standard and (ii) outcome based programs that require satisfaction of a health standard such as weight loss.

I. PROGRAM MUST BE VOLUNTARY

A wellness program will be voluntary if:

  • it does not require employees to participate;
  • it does not exclude an employee who does not participate from health coverage or otherwise limit access to health coverage by such employee; and
  • the employer does not take any adverse employment action, retaliate against or threaten a non-participating employee or a participating employee who fails to achieve a specified health standard.

In addition, if the program is part of a group health plan, the plan must provide a notice that explains what medical information will be obtained, how it will be used, who will receive it and the restrictions on disclosure. The medical information obtained is protected health information under HIPAA and may only be disclosed to the employer in aggregate terms that do not disclose the identity of specific individuals.

II. MAXIMUM INCENTIVES OR PENALTIES

An employer may offer incentives, either in the form of rewards or penalties, provided that the incentives do not exceed 30% of the total cost of employee only coverage under the employer's group health plan. This limit is less than the 30% of the total cost of family coverage permitted under HIPAA if spouses and dependents are eligible to participate in the program. It is also less than the limit under the Affordable Care Act for tobacco cessation programs which may be as high as 50% of the total cost for employee only coverage.

III. NEXT STEPS FOR EMPLOYERS

Although the rules are only proposed at this point, employers should:

  • consider whether the 30% cap on incentives will be exceeded for any wellness program;
  • ensure that any program is voluntary as described above; and
  • confirm that any wellness program complies with the HIPAA privacy rule.

If you have any questions about this update on wellness program, please contact the author of this Article or another attorney at Clifton Budd & DeMaria, LLP.

About the Author
Eva A. Rasmussen
Benefits Counsel
Eva A. Rasmussen concentrates on the design, implementation and communication of qualified plans and deferred compensation arrangements as well as...
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