Employer wellness programs get new guidance

By Julie Barnes, Director of Health Policy
May 06, 2015

Employers seeking guidance on their workplace wellness programs have plenty to consider. On April 16, 2015, several federal agencies released their positions on wellness programs:

Finally, on April 20, 2015, the Equal Employment Opportunity Commission (“EEOC”) published a proposed rule (and FAQs and a fact sheet for small businesses) to offer guidance for employers on how to comply with the Americans with Disabilities Act (“ADA”). 

Why the flurry of activity on wellness programs? There is confusion and controversy about the lack of harmony between the many statutes that govern employer wellness programs.

  • For a long time, the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA) allowed employers to provide financial incentives for employee participation in wellness programs.
  • In 2013, the Department of Labor, HHS and the Treasury issued guidance that was supposed to define the conditions under which wellness programs could be offered, but the EEOC did not join the other agencies in the guidance.
  • EEOC’s silence left employers and their attorneys unclear about the application of federal laws like the ADA (which limits circumstances under which an employer may require physical exams or answers to medical inquiries) and the Genetic Information Nondiscrimination Act (GINA -- which forbids employer from asking about an employee’s family medical history).
  • The EEOC further confused the industry by filing three lawsuits against large employers, alleging that their wellness programs violated the ACA and GINA prohibitions against employees being forced to provide health information that is not job-related.

What do the rules say? The agencies that had already written comprehensive rules issued new guidance to clarify certain issues in light of the EEOC’s proposed rulemaking. There remain a few inconsistencies between the agencies. The main issue is whether a wellness program is “voluntary” – and what this means for medical exams, obtaining medical histories, and penalties for failure to participate.

The EEOC proposed rule has five basic requirements for wellness programs. They must:

  1. Be voluntary. No requirement to participate, no denial of health plan or adverse employment action for failure to participate.
  2. Have the right purpose. The wellness program must be designed to promote health or prevent disease.
  3. Notify employees. If the wellness program is part of a group health plan and includes disability-related inquiries or medical exams, employers must provide a notice that clearly explains the how the information will be used and disclosed.
  4. Allow reasonable alternatives. All wellness programs must offer a reasonable alternative (this is broader than the HIPAA and ACA requirement for only health-contingent wellness programs).
  5. Limit incentives. The max allowable incentive for participation is 30% of the total cost of employee-only coverage. This limitation only applies to wellness programs that require disability-related inquiries or medical exams.
    1. This is different from HIPAA and the ACA’s rule, which permits an incentive of 30% of the total cost of the coverage in which the employee and any dependents are enrolled, and also provides that the limitation is applied only with respect to health-contingent wellness programs.
    2. HIPAA and the ACA permit incentives up to 50% of the employee-only premium for participation in a smoking cessation program, the 30% limitation found in the proposed rule may cap that incentive for some smoking cessation programs.

What should employers with wellness programs do now?

Until June 19, 2015, employers can comment directly to the EEOC about the proposed rule. The EEOC asked for comments on several specific questions related to the above requirements, including the ones that have a marked discrepancy from other agency rules.

Employers may want to review their wellness programs to evaluate whether they are in compliance with the new guidance.