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May 17, 2016
EEOC issues final employee wellness program rules: The ADA rule

By Joan Farrell, JD, Senior Legal Editor

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The Equal Employment Opportunity Commission (EEOC) has issued final wellness rules regarding incentives employers may use to encourage employee participation in wellness programs in compliance with the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The ADA rule applies to all wellness programs that include disability-related inquiries or medical exams—regardless of whether a wellness programs is part of, or outside of, an employer-sponsored group health plan.

The GINA rule addresses incentives an employer offers for an employee’s spouse to participate in a wellness program. The rule applies to the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the rule. The information below covers the ADA rule. The GINA wellness rule will be covered in an upcoming article.

ADA

The ADA prohibits employers from asking employees disability-related questions or requiring medical exams, subject to certain exceptions. One exception is for voluntary employee health programs, including wellness programs. The ADA also requires employers to provide reasonable accommodations to allow individuals with disabilities equal access to wellness programs. Here are some key points from the new rule:

Employee health program. An employee health program must be reasonably designed to promote heath or prevent disease. To satisfy this standard, the program:

  • Must have a reasonable chance of improving the health of, or preventing disease in, participating employees
  • Must not be overly burdensome
  • Must not be a subterfuge for violating the ADA or other laws prohibiting employment discrimination
  • Must not be highly suspect in the method chosen to promote health or prevent disease
  • Must provide results, follow-up information, or advice designed to improve employee health, unless the collected information is used to design a program that addresses at least some of the conditions identified

    Must not exist mainly to shift costs to employees based on their health; or to give employers information to estimate future health care costs

Voluntary. A wellness program is voluntary as long as the employer:

  • Does not require employees to participate
  • Does not deny coverage under its group health plans for nonparticipation, or limit benefits for employees who do not participate (except for permissible incentive limits)
  • Does not take adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of the ADA; and
  • Provides employees with a notice that:
    • Is written in a way the employee is likely to understand
    • Describes the type of medical information that will be obtained and the purposes for which the information will be used
    • Describes the restrictions on the disclosure of medical information, the parties with whom it will be shared, and the methods the employer will use to ensure confidentiality

Incentive limits. Employers may offer incentives, either in the form of a reward or penalty, up to a maximum of 30% of the total cost of self-only coverage (including both the employee’s and employer’s contribution.

The 30% limit applies to all workplace wellness programs whether they are: offered only to employees enrolled in an employer-sponsored group health plan; offered to all employees whether or not they are enrolled in such a plan; or offered as a benefit of employment where an employer does not sponsor a group health plan or group health insurance coverage.

Confidentiality. An employee’s medical information may only be provided to the employer in aggregate terms that do not disclose any employee’s identity. Employers are prohibited from requiring employees to agree to the sale, sharing, or other disclosure of medical information (except for specific activities related to the wellness program).

Safe harbor provision. The new rule expressly states that the ADA’s safe harbor provision does not apply to wellness programs. Two federal district courts have ruled that the safe harbor provision protected employers that imposed penalties on employees who did not comply with wellness program requirements. However, the EEOC states it has the authority to provide its own “considered analysis” of the law because neither court ruled that the statute of the language was unambiguous.

The EEOC has provided a Q&A on the ADA final rule as well as a Small Business Fact Sheet.

Joan FarrellJoan S. Farrell, JD, is a Legal Editor for BLR’s human resources and employment law publications. Ms. Farrell writes extensively on the topics of workplace discrimination, unlawful harassment, retaliation, and reasonable accommodation. She is the editor of the ADA compliance manual—ADA Compliance: Practical Solutions for HR. Before coming to BLR, Ms. Farrell worked as in-house counsel for a multistate employer where she represented management in administrative matters and provided counseling on employment practices.

Follow Joan Farrell on Google+

Questions? Comments? Contact Joan at jafrrell@blr.com for more information on this topic.

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