The EEOC issues proposed regulations on wellness programs

Since the implementation of the Affordable Care Act, employers have increasingly looked to wellness programs to cut health care costs and to improve the health of their employees. For instance, many employers offer wellness programs to employees that use 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 employers also offer financial and other incentives for employees who participate in such wellness programs or who achieve certain health outcomes. While the use of financial incentives and rewards has been expressly approved by the ACA and its implementing regulations, the Equal Employment Opportunity Commission ('EEOC') has recently targeted wellness programs that offer financial or other incentives by filing lawsuits against employers and arguing that such wellness programs run afoul of the Americans with Disabilities Act ('ADA'). The crux of these lawsuits has been whether such wellness programs are voluntary programs or whether the programs constitute mandatory (and therefore, unlawful) inquiries into an employee's health. As a result of these lawsuits, employers have been left in a state of uncertainty, asking themselves what exactly is a permissible wellness program in light of the ADA? To clear up this uncertainty, the EEOC issued proposed regulations on April 16, 2015, which shed light on how workplace wellness programs can comply with the ADA. Among other things, the proposed regulations provide the following:

• Employers May Offer Limited Incentives: The proposed regulations clarify that the ADA allows employers to offer incentives – in the form of rewards for participating employees who achieve certain health outcomes and penalties if participating employees fail to achieve health outcomes – of up to thirty percent (30%) of the total cost of employee-only coverage to employees who participate in wellness programs and/or for achieving health outcomes. The total cost of coverage is the amount the employer and the employee pay for health insurance; not just the employee's share.

• The Wellness Program Must Be Truly Voluntary: The proposed regulations reiterate that a wellness program must be voluntary. Under the ADA, employers are generally restricted from obtaining medical information from employees; however, medical examinations and inquires about an employee's health are permissible if they are part of a 'voluntary' employee program. In order for participation in a wellness program to be voluntary, an employer must meet several requirements, including: (1) employees cannot be required to participate in the program; (2) employees cannot be denied access to health care coverage or otherwise limited to certain coverage under the employer's health plans for non-participation; and (3) employees cannot be retaliated against or discriminated against for non-participation or for failing to achieve certain health outcomes.

• The Wellness Program Must Be Designed to Promote Health or Prevent Disease: The proposed regulations clarify that an employer's wellness program must be considered 'an employee health program' under the ADA. According to the EEOC, 'a wellness program is considered an employee health program when it is reasonably designed to promote health or prevent disease.' 'The program must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting discrimination, or highly suspect in the method chosen to promote health or prevent disease.'

• Notice Requirements: Under the proposed regulations, if a wellness program is considered an 'employee health program,' the employer must provide a notice to employees explaining what medical information will be obtained, how it will be used, and the restrictions on disclosures.

• Confidentiality Requirements: The proposed regulations create an additional confidentiality requirement that applies to medical information obtained through the employer's wellness program. Namely, a covered entity may only receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals except as it is necessary to administer the plan.

While instructive, the proposed regulations are not final. The EEOC will accept comments from the public about the proposed regulations until June 19, 2015. At that time, the EEOC will evaluate all of the comments it receives and make revisions in response to those comments. The EEOC will then vote on the final rule and it will eventually be published, with an effective date, after it is coordinated with other federal agencies. Until the rule is finalized, the EEOC has indicated that it would be wise for employers to comply with the proposed regulations. The EEOC has specifically recommended that employers make sure they: (1) do not require employees to participate in wellness programs; (2) do not deny health insurance to employees who do not participate; and (3) do not take any adverse employment action or retaliate against employees who do not participate in wellness programs or who do not achieve certain health outcomes. In addition, the EEOC is reminding employers that they must provide reasonable accommodations to employees with disabilities that allow those employees to participate in wellness programs and obtain incentives offered. If you have any questions regarding the EEOC's proposed regulations, please contact Mellissa Schilling.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice.  Please consult with an attorney if specific legal information is needed.