On May 17, 2016, the EEOC issued both a Final Rule under Title I of the Americans with Disabilities Act (ADA) (ADA Final Rule) and a Final Rule under Title II of the Genetic Information Nondiscrimination Act (GINA) (GINA Final Rule) with regard to wellness programs. The two rules focus on rewards and incentives provided to employees in order to encourage participation in wellness programs, where the program involves a disability-related inquiry (such as health risk assessments) or medical examinations (including biometric screenings.) The EEOC’s position is that much of the guidance is clarification of existing law, and is therefore effective immediately. The expanded notice requirements and the rules regarding the use of financial inducements are effective for plan years beginning on or after January 1, 2017.
The ADA Final Rule largely retains the provisions of the Proposed Regulations published on April 20, 2015 and the GINA Final Rule largely retains the provisions of the Proposed Regulations published on October 30, 2015. One of the significant changes under the ADA Final Rule is a new notice requirement. The new notice is part of the requirement that the wellness program be “voluntary.” The definition of “voluntary” under the ADA Final Rule includes the following factors:
Participation/Incentives. The employee may not be required to participate in the wellness program, and the financial incentives may not be so substantial as to be “coercive.”
The EEOC determined that the incentive offered would not be coercive if it is not more than 30% of the total cost (employee plus employer contribution) of self-only coverage. This is similar to the HIPAA requirement for health-contingent programs, but under the ADA Final Rule, it applies to both health-contingent and participation-only programs.
The incentive limit is calculated based on the cost of self-only coverage, unlike the HIPAA nondiscrimination rules, which calculate the incentive limit, based upon the total coverage the employee has, including family coverage if spouses and dependents are able to participate in a wellness program. The ADA Final Rule explains that the ADA non-discrimination rules apply to employees and applicants, not to spouses and dependents. Accordingly, incentives related to spousal and dependent participation in the wellness program would not be subject to the ADA Final Rule, but the GINA Final Rule applies the same limit to incentives for spouses who provide information about current or past health status.
The calculation of the incentive is as follows:
Where participation in the wellness program depends upon enrollment in a particular group health plan, then the incentive would be based upon the cost of the self-only coverage under that plan.
Where an employer only offers one group health plan, then the incentive would be based upon the cost of the self-only coverage under that plan.
Where an employer offers two or more group health plan options, the incentive would be based upon the cost of the lowest-cost self-only coverage offered.
Where an employer does not offer a group health plan, then the incentive would be based upon the cost of the second-lowest cost Silver Plan available through the state or federal health care exchange in the location the employer identifies as its principal place of business.
A smoking cessation program is not limited to the 30% incentive if the employee is only asked about tobacco use, and the 50% incentive limit under HIPAA could apply. A smoking cessation program that includes a medical screening for tobacco use, however, is limited to the 30% incentive as that would be a medical examination under the ADA Final Rule.
The GINA Final Rule clarifies that tobacco use is not genetic information.
No Retaliation for Non-Participation. The employer may not take any adverse action, retaliate against, or coerce employees who choose not to participate in the wellness program.
No Retaliation for Non-Participation. The employer may not take any adverse action, retaliate against, or coerce employees who choose not to participate in the wellness program.
Notice Requirements. Employees participating in a wellness program that collects employee medical information (through disability-related questions and/or medical examinations) must be provided a notice.
The notice must be written in language reasonably likely to be understood by the employee from whom medical information is being obtained
The content of the notice must include the following information:
The medical information that will be collected;
How the medical information will be used;
With whom the medical information will be shared; and
How the medical information will be kept confidential.
The notice may be combined with any notice being provided under HIPAA as long as the content requirements are met.
The EEOC subsequently provided a sample notice for employers to use to meet this notice requirement. Use of the sample notice is not required.
There is no specific timing requirement for distributing the notice, but it must be given to the employee prior to the employee providing any health information, and in sufficient time for the employee to decide whether to participate in the wellness program.
The notice may be provided in any format that will be effective in reaching employees being offered participation in the wellness program, including hard copy, or by email with the subject line clearly identifying what the notice is about. The EEOC cautions employers not to provide the notice along with a lot of other information not relating to the wellness program as this could result in an ineffective notification.
Employers that offer wellness programs should be aware of these new rules and prepare for compliance with the new requirements.
© Boutwell Fay LLP 2016, All Rights Reserved. This handout is for information purposes only, and may constitute attorney advertising. It should not be construed as legal advice and does not create an attorney-client relationship. If you have questions or would like our advice with respect to any of this information, please contact us. The information contained in this article is effective as of August 31, 2016.