EEOC Guidance on Employee Wellness Programs

The Equal Employment Opportunity Commission (EEOC) recently proposed much-anticipated guidance for employers and insurers: employee wellness programs.

The agency’s Notice of Proposed Rulemaking (NPRM) addresses how Title I of the Americans with Disabilities Act (ADA) applies to employee wellness programs.

Many employers have adopted employee wellness programs as a way to lower medicals costs and promote a healthy workforce. Some programs incorporate health risk assessments (e.g., the measurement of body weight and cholesterol, blood glucose, and blood pressure levels) and offer incentives for meeting health-related goals.  Other employers simply provide incentives to encourage employees to participate in wellness programs, such as nutrition classes and weight-loss programs.

The EEOC & Congress

The EEOC and Congress have been at odds over what has been characterized as “aggressive” financial incentives in wellness programs. On March 24, the House Education and the Workforce Committee held a hearing on a proposed bill that would limit the EEOC’s enforcement activity toward these initiatives—H.R. 1189, the Preserving Employee Wellness Programs Act.

This Congressional counter-measure may have prompted the EEOC’s NPRM which clarifies that wellness programs are permitted, but may not be used to discriminate based on disability: “Employers … may not subject employees to interference with their ADA rights, threats, intimidation, or coercion for refusing to participate in a wellness program or for failing to achieve certain health outcomes,” the EEOC press release states. “Individuals with disabilities must be provided with reasonable accommodations that allow them to participate in wellness programs and to earn whatever incentive an employer offers.”

Employee wellness programs must comply with a range of federal laws, including the ADA and the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Patient Protection and Affordable Care Act. The EEOC’s proposed employee wellness rule clarifies a number of important compliance questions, including: what it means for an employee health program to be voluntary, what incentives employers may offer as part of a voluntary employee health program, and what notice and confidentiality requirements apply to medical information collected under the programs.

Key provisions of the EEOC’s wellness rules:

Programs must be reasonably designed to promote health or prevent disease: In order to meet the standard, the program must have a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome. A subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.

Programs must be voluntary: Under existing regulations, employee health programs that include disability-related inquiries or medical examinations must be voluntary. The proposed rules clarify that employees may not be required to participate in a wellness program, may not be denied health insurance or given reduced health benefits if they do not participate and may not be disciplined for not participating. In addition, employers must also provide a notice clearly explaining what medical information will be obtained, how the medical information will be used, who will receive the medical information, the restrictions on its disclosure and the methods the covered entity uses to prevent improper disclosure of medical information.

 Employers may offer limited incentives to encourage program participation: The amount of the incentive that may be offered for an employee to participate or to achieve health outcomes may not exceed 30 percent of the total cost of employee-only coverage. The EEOC provides the following example: If the total cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum incentive for an employee under that plan is $1,500.

Employers must safeguard all medical information collected: Employers may only receive medical information in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific employees. For wellness programs that are part of a group health plan, the full-range of HIPAA privacy rules apply. Meanwhile, employers that are not considered HIPAA-covered entities may generally comply with the ADA by signing a certification, as provided for by HIPAA regulations, that they will not use or disclose individually identifiable medical information for employment purposes and abiding by that certification.

Employers must make reasonable accommodations: Employers must provide reasonable accommodations that enable employees with disabilities to participate and to earn whatever incentives the employer offers. According to the EEOC, this may include providing a sign language interpreter for a deaf employee who wants to participate in a nutrition class; providing materials related to a wellness program in alternate format, such as large print or Braille, for someone with vision impairment; and providing an alternative to a blood test if an employee’s disability would make drawing blood dangerous.

The EEOC will accept comments on the NPRM until June 19, 2015. We will be closely tracking the status of the proposed rules and encourage readers to check back here for updates.