Employers Assess Risk Tolerance with Wellness Program Incentives
Do you offer wellness programs to your employees? Employers are now uncertain to what extent they can use incentives as part of a wellness program. Continue reading to learn more.
Employers designing 2019 wellness programs must decide what approach to take on program incentives without Equal Employment Opportunity Commission (EEOC) guidance on the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).
The commission has a Notice of Proposed Rulemaking tentatively slated for January 2019. Last year, the U.S. District Court for the District of Columbia decided the commission's 2016 ADA and GINA wellness regulations were arbitrary and vacated them, effective Jan. 1, 2019.
Employers again are "in the uncomfortable position of not knowing with certainty whether and to what extent they can use incentives as part of a wellness program that involves medical examinations, disability-related inquiries and/or genetic information," wrote Lynne Wakefield and Emily Zimmer, attorneys with K&L Gates in Charlotte, N.C., in a joint statement.
The Society for Human Resource Management (SHRM) "has long advocated for proposals that will ensure consistency between the wellness rules that the EEOC has jurisdiction over, the ADA and GINA, with those provided under the ACA [Affordable Care Act]," said Nancy Hammer, SHRM vice president, regulatory affairs and judicial counsel. "While EEOC's 2016 rulemaking effort adopted the ACA's 30 percent incentive, it added new requirements that would have discouraged employers from providing wellness options for employees. We are hopeful that the EEOC is able to revisit the rules to ensure both consistency with existing rules and flexibility to encourage employers to adopt innovative programs to improve employee health and reduce costs."
ADA and GINA Requirements
Employers have long sought guidance over whether and when wellness program incentives—rewards or penalties for participating in biometric screenings and health risk assessments connected with the programs—comply with the ADA and GINA.
The ADA prohibits employers from conducting medical examinations and collecting employee medical history as part of an employee health program unless the employee's participation is voluntary, noted Ann Caresani, an attorney with Tucker Ellis in Cleveland and Columbus, Ohio.
GINA prohibits employers from requesting, requiring or purchasing genetic information from employees or their family members, unless the information is provided voluntarily.
The EEOC in 2000 asserted that for a wellness program to be voluntary, employers could not condition the receipt of incentives on the employee's disclosure of ADA- or GINA-protected information.
However, in 2016, the commission issued regulations providing that the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage would not render involuntary a wellness program that seeks the disclosure of ADA-protected information. The regulations also permitted employers to offer incentives of up to 30 percent of the cost of self-only coverage for disclosure of information, in accordance with a wellness program, about the manifestation of a spouse's diseases or disorder, Caresani said.
Wakefield and Zimmer noted that the EEOC's 2016 wellness regulations applied to wellness programs that provided incentives tied to:
- Biometric screenings for employees and spouses.
- Disability-related inquiries directed at employees, which might include some questions on health risk assessments.
- Family medical history questions, such as risk-assessment questions that ask about the manifestation of disease or disorder in an employee's family member and/or such questions about the disease or disorder of an employee's spouse.
- Any other factors that involve genetic information.
Court Actions
The AARP challenged the 2016 rule, arguing that the 30 percent incentives were inconsistent with the voluntary requirements of the ADA and GINA. Employees who cannot afford to pay a 30 percent increase in premiums would be forced to disclose their protected information when they otherwise would choose not to do so, Caresani explained.
While the 30 percent cap was consistent with the Health Insurance Portability and Accountability Act (HIPAA) as amended by the ACA, the AARP said this was inappropriate, as HIPAA and the ADA have different purposes, noted Erin Sweeney, an attorney with Miller & Chevalier in Washington, D.C..
In addition, the change from prohibiting any penalty to permitting one of 30 percent was not supported by any data, according to the AARP.
In the summer of 2017, the U.S. District Court for the District of Columbia held that the EEOC's rule was arbitrary. The court sent the regulations back to the EEOC for further revisions.
In December 2017, the court vacated the 2016 rule after the EEOC initially said that the new rule would not be ready until 2021.
Conservative to Aggressive Approaches
Wakefield and Zimmer observed that employers may take several different approaches as they design wellness programs for next year:
- No incentives (most conservative approach). These types of wellness programs can still include biometric screening and health risk assessments that employees and spouses are encouraged to complete, but no rewards or penalties would be provided in connection with their completion.
- Modest incentives (middle-ground approach). A modest incentive is likely significantly less than 30 percent of the cost of self-only coverage, given the court's finding that the EEOC did not provide adequate justification for an incentive level-up to 30 percent.
- Up to 30 percent incentives (more aggressive approach). Although the court did not rule that a 30 percent incentive level would definitely cause a wellness program to be considered involuntary, incentives at this level after 2018 likely will expose employers to lawsuits, they wrote.
Multiple-Point Program
One good way to demonstrate compliance, they noted, is a multiple-point program in which participants engage in different activities and earn an incentive by participating in enough activities apart from biometric screenings, risk assessments or providing their spouse's health information.
For example, an employer could let employees take health care literacy quizzes or offer a program that measures a worker's activity as opposed to fitness, Caresani noted. She said, "Programs that are participatory are probably less effective than outcome-based programs, but they are more popular with employees and are less likely to pose litigation risks."
SOURCE: Smith, A. (1 August 2018) "Employers Assess Risk Tolerance with Wellness Program Incentives" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/risk-tolerance-wellness-program-incentives.aspx
EEOC Issues Final Rules on Employee Wellness Programs
From the U.S. Equal Employment Opportunity Commission.
WASHINGTON, DC--The U.S. Equal Employment Opportunity Commission (EEOC) today issued final rules that describe 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. The two rules provide guidance to both employers and employees about how workplace wellness programs can comply with the ADA and GINA consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act (Affordable Care Act).
The rules permit wellness programs to operate consistent with their stated purpose of improving employee health, while including protections for employees against discrimination. The rules are available in the Federal Register at Regulations Under the Americans with Disabilities Act and Genetic Information Nondiscrimination Act (GINA). EEOC also published question-and-answer documents on both rules today, available at Q&A ADA Wellness Final Rule and Q&A GINA Final Rule, and two documents for small businesses Facts on ADA and Wellness and Facts on GINA and Wellness.
Many employers offer workplace wellness programs intended to encourage healthier lifestyles or prevent disease. These programs sometimes use medical questionnaires or health risk assessments and biometric screenings to determine an employee's health risk factors, such as body weight and cholesterol, blood glucose, and blood pressure levels. Some of these programs offer financial and other incentives for employees to participate or to achieve certain health outcomes.
The ADA and GINA generally prohibit employers from obtaining and using information about employees’ own health conditions or about the health conditions of their family members, including spouses. Both laws, however, allow employers to ask health-related questions and conduct medical examinations, such as biometric screenings to determine risk factors, if the employer is providing health or genetic services as part of a voluntary wellness program. Last year, EEOC issued proposed rules that addressed whether offering an incentive for employees or their family members to provide health information as part of a wellness program would render the program involuntary.
The final ADA rule provides 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 percent of the total cost of self-only coverage. The final GINA rule provides that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30 percent 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 (such as family medical history or the results of genetic tests) of an employee, an employee’s spouse, and an employee’s children.
The final rules, which will go into effect in 2017, apply to all workplace wellness programs, including those in which employees or their family members may participate without also enrolling in a particular health plan.
“The EEOC received comments on both rules from a broad array of stakeholders and considered them carefully in developing this final rule,” said EEOC Chair Jenny R. Yang. “The Commission worked to harmonize HIPAA’s goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require that participation in certain types of wellness programs is voluntary. These rules make clear that the ADA and GINA provide important safeguards to employees to protect against discrimination.”
Program Design
Both rules also seek to ensure that wellness programs actually promote good health and are not just used to collect or sell sensitive medical information about employees and family members or to impermissibly shift health insurance costs to them. The ADA and GINA rules require wellness programs to be reasonably designed to promote health and prevent disease.
Protecting Confidentiality
The two rules also make clear that the ADA and GINA provide important protections for safeguarding health information. The ADA and GINA 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 some best practices for ensuring confidentiality, such as adopting and communicating clear policies, training employees who handle confidential information, encrypting health information, and providing prompt notification of employees and their family members if breaches occur.
EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at EEOC.gov.
EEOC proposes amendment related to Genetic Information and Wellness Programs
The Equal Employment Opportunity Commision (EEOC) issued a proposed rule amending Genetic Information Nondiscrimination Act (GINA) to allow employers to offer financial incentives and inducements to spouses as part of a wellness program. The rule proposed on Oct. 30, 2015 is currently open for public comment.
The proposed regulations would clarify that GINA does not prohibit employers from offering limited inducements for the provision by spouses of information about their current or past health status as part of an HRA. This may include a medical questionnaire, a medical examination (e.g. to detect high blood pressure or high cholesteral) or both. However, the provision of genetic information must be voluntary with written authorization.
The EEOC further proposes to add a requirement that any health or genetic services in connection with which an employer requests genetic information be reasonably designed to promote health or prevent disease. This addition will make the revised GINA regulations consistent with the proposed rule amending the ADA's regulations as they relate to wellness programs, which permits employers to collect medical information as part of a wellness program only if the program are reasonably designed to promote health or prevent disease.
This proposal would not alter the absolute prohibition against the use of genetic information in making employment decisions.
There are 6 substantive changes to the GINA regulations. Click here to read through those changes.
The EEOC invites the public to comment on the proposed regulation amendment.