The Americans with Disabilities Act (ADA) generally prohibits employers from requiring current employees to submit to medical examinations or medical inquiries unless the exam or inquiry is “job-related and consistent with business necessity.” Guidance issued by the Equal Employment Opportunity Commission (EEOC) in 2000 makes an exception to this rule for wellness programs that request employee medical information (e.g. biometric testing, health risk assessments, etc.) as a condition of participating in the program. However, this exception only applies if participation in the wellness program is “voluntary” – meaning that participation may not be required and non-participants may not be penalized.
Over the past fifteen years, employers and their benefits consultants have developed a myriad of strategies for encouraging employee participation in wellness programs, many of which involve “discounts” on employee contributions for health coverage for wellness participants. More aggressive employers have gone so far as to condition enrollment in their group health plan on an employee’s participation in a wellness program. Allegations of such requirements were the basis for EEOC lawsuits filed in late 2014 against Honeywell International Inc. and several other employers. It is in this context that the EEOC published their proposed regulations on April 20, 2015 to further define the “do’s and don’ts” for wellness programs under the ADA. The proposed regulations, if finalized in their current form, would change the wellness landscape in five significant ways.
The Affordable Care Act caps aggregate financial incentives that are offered under wellness programs at 30% of the applicable group health plan premium (and 50% for tobacco-related incentives). The EEOC proposed regulations, on the other hand, would cap total financial incentives for participation in any wellness program(s) that involves employee medical inquiries (e.g. health risk assessments) or examinations (e.g. biometric testing) to 30% of the cost of employee-only coverage.
Employee Notice Requirements
If a wellness program is offered as part of a group health plan, employees must be provided with a notice that: (i) describes the type of medical information that will be obtained through the program and the purposes for which it is used; (ii) describes applicable restrictions on the disclosure of the employee’s medical information; and (iii) is written in a manner that the employee is likely to understand.
Reasonable Design Requirement
Wellness programs which include medical inquiries or examinations must be “reasonably designed to promote health or prevent disease.” The EEOC explains that medical information that is gathered through a wellness program must be put to a use that benefits program participants. For example, if a particular health risk is identified through such information, the risk should be communicated to the participant. Gathering such information without providing employees with follow-up information or advice would not meet this standard.
Equal Benefit Rule
Some employers have offered additional health plan options to wellness participants while non-participants are limited to participating in a single less generous plan. The proposed regulations would prohibit employers from denying coverage under any group health plan or otherwise limiting the extent of benefits available to employees who do not participate in wellness programs.
The EEOC proposed regulations further prohibit employers from taking any “adverse employment action” due to an employee’s decision not to disclose medical information or submit to medical exams in connection with wellness programs. For programs that offer financial incentives for participation, the “packaging” of these incentives will be important. Premium discounts will remain lawful if they are within the applicable limits set forth in the ACA and the EEOC regulations. However, premium “surcharges” for non-participation would likely be considered unlawful retaliation.
The EEOC will be accepting public comments on the proposed regulations through June 19, 2015. Although the regulations are merely “proposed” at this stage, they provide a road map for how the Commission interprets the ADA in the context of wellness programs. Non-compliant programs could conceivably be challenged even before the regulations are finalized. For this reason, employers would be wise to reconsider their existing programs in light of the new proposed regulations now.