Final Wellness Program Rules Provide Clarification and Simplification

The U.S. Equal Employment Opportunity Commission (EEOC) issued two final rules that explain how Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses.

Tami Simon, employee benefits attorney and global practice leader of Xerox HR Services’ Knowledge Resource Center in Washington, D.C., tells PLANSPONSOR the EEOC has been grappling with how a plan can tie incentives to wellness programs and still be voluntary and not coercive or discriminatory. “It decided it can live with a 30% of the total cost of self-only coverage incentive, but employers must meet other requirements to make sure the plan is voluntary, promotes health and does not discriminate,” she says.

The final ADA rule states that wellness programs that are part of a group health plan and that ask questions about employees’ health or include medical examinations may offer incentives of up to 30% of the total cost of self-only coverage. The final GINA rule says that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30% of the total cost of self-only coverage, the same incentive allowed for the employee. No incentives are allowed in exchange for the current or past health status information of employees’ children or in exchange for specified genetic information (e.g., family medical history or results of genetic tests) of an employee, an employee’s spouse, and an employee’s children.

“We were happy to see that the final rules were more straightforward about the 30% calculation of incentives for spouses; employers can apply a straight 30% incentive rather than having to offset incentives for the employee and spouse,” Simon says. “It’s a difference between high school math and junior high math.” The proposed GINA rule had said the total incentive for an employee and spouse to participate in a wellness program that is part of a group health plan and collects information about current or past health status may not exceed 30% of the total cost of the plan in which the employee and any dependents are enrolled.

In line with the proposed ADA rule, for smoking cessation programs, the final rule says employers can offer a 50% of self-only coverage incentive if they only ask an employee if he or she smokes, but if the employer tests for nicotine use, it can only offer a 30% incentive, Simon notes.

Simon says one thing Xerox HR was hoping for is that incentives that didn’t have a lot of value—i.e. baseball hats, T-shirts, etc.—wouldn’t be considered incentives, but that is not the case in the final rule.

NEXT: Required notices and use of the bona fide insurance benefit plan safe harbor

The ADA and GINA final rules state that information from wellness programs may be disclosed to employers only in aggregate terms. The ADA rule requires that employers give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential.

GINA includes statutory notice and consent provisions for health and genetic services provided to employees and their family members. Both rules prohibit employers from requiring employees or their family members to agree to the sale, exchange, transfer, or other disclosure of their health information to participate in a wellness program or to receive an incentive. The interpretive guidance published along with the final ADA rule and the preamble to the GINA final rule identify best practices for ensuring confidentiality.

Simon notes that the EEOC indicated a model notice will be coming out, which will help all employers start from the same page.

In its final rules, the EEOC confirmed that the bona fide insurance benefit plan safe harbor does not apply to wellness programs that include disability or genetic questions. This was the argument by which Flambeau Inc. won victory in the EEOC’s lawsuit against it. While Simon does not have a crystal ball to see how the final rules will affect the outcomes of outstanding EEOC wellness program lawsuits, she says it will be interesting to see if going forward, the lawsuits will state that the safe harbor applies.

Xerox HR services has not finished a complete side-by-side comparison between the proposed rules and the final rules, but it has focused on understanding the final rules and has issued an alert. 

Simon says employers should seek counsel to determine what changes to their current wellness programs, if any, are needed. She also notes that the notice requirements and incentive limits for the ADA and GINA are applicable for the first day of the first plan year beginning on or after January 1, 2017, but it appears that other provisions are effective immediately.