EEOC Proposes New Incentive Limits for Workplace Wellness Programs

Manatt on Health

The Equal Employment Opportunity Commission (EEOC) proposed two new regulations on January 7 applying the Americans with Disabilities Act of 1990 (ADA) and the Genetic Information Nondiscrimination Act of 2008 (GINA) to workplace wellness programs.1 Because the proposed rules have not yet been published in the Federal Register, the deadline for public comments is not yet set. Further, in light of the transition to the Biden Administration, their publication could be delayed. If, following a comment period, the rules are finalized in their current form, they will significantly limit the incentives that can be offered in wellness programs that request disability-related or genetic information or medical examinations of employees. Even before the rules are finalized, they could be relevant to employers because there is currently a complete lack of regulatory guidance on what level of incentives is permissible under the ADA and GINA.

Background

The ADA prohibits employers from requesting disability-related information from employees or requiring medical examinations, although an exception permits voluntary workplace wellness programs. 42 U.S.C. § 12112(d)(1), (4). GINA prohibits an employer from requiring or requesting genetic information from employees (including the medical history of an employee’s relative), with limited exceptions that include workplace wellness programs that meet certain requirements. 42 U.S.C. § 2000f-1(b)(2). Federal regulations implementing the health-status discrimination provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Patient Protection and Affordable Care Act (ACA), permit group health plans and issuers of group health insurance coverage to offer incentives to participants in workplace wellness programs as part of a group health plan, 26 C.F.R. § 54.9802-1(f); 29 C.F.R. § 2590.702(f); 45 C.F.R. §§ 146.121(f), 147.110 (referred to within as “ACA wellness regulations”), but these rules do not guarantee that the wellness program complies with the ADA or GINA.

A series of EEOC enforcement actions in 2014 intensified the focus on whether ACA-compliant wellness programs could nonetheless violate the ADA or GINA. The EEOC finalized a rule in 2016 that would have broadly aligned its interpretation of the ADA and GINA with ACA wellness regulations. However, in 2017, a federal district court vacated the provisions of these rules that permitted financial incentives to be offered as part of a wellness program that was subject to the ADA or GINA. AARP v. EEOC, 292 F. Supp. 3d 238 (D.D.C. 2017).

New Notices of Proposed Rulemaking (NPRMs)

The EEOC’s proposed rules would clarify what incentives or rewards can be offered in a wellness program that is subject to the ADA or GINA. Even though these rules are not finalized and therefore do not have the force of law, the statutory ADA and GINA restrictions on wellness programs remain in force, without any currently applicable regulatory guidance on what level of incentive would violate the ADA or GINA. Therefore, even before these rules are finalized, employers should evaluate their approach to wellness programs covered by the ADA or GINA. Table 1, below, summarizes what level of incentive would be permitted under the EEOC’s proposed rules and the existing ACA wellness regulations, depending on whether the wellness program is part of a group health plan, is health-contingent or participatory, or involves a medical examination or disability-related or genetic information. Further details follow the table.

Table 1. Limits on Permissible Incentives in Wellness Programs Under EEOC Proposed Rules

  Health-contingent or participatory Disability-related information or medical examination Medical history from employee’s spouse or dependent No disability-related or genetic information or medical exam
Not part of a group health plan N/A De minimis De minimis No limit
Part of a group health plan Health-contingent Consistent with ACA rule De minimis Consistent with ACA rule
Participatory De minimis De minimis No limit

ADA

The ADA NPRM states that wellness programs can offer only “de minimis” incentives for medical examinations or disability-related information, except when the wellness program offers health-contingent incentives for medical exams or disability-related information and complies with the HIPAA/ACA wellness rules for health-contingent programs as part of a group health plan. Proposed 29 C.F.R. §§ 1630.14(d)(2)(iv), 1630.16(f). This means that participatory wellness programs, or wellness programs that are not part of a group health plan, can offer only de minimis incentives for medical exams or disability-related information.

The proposed rule offers four factors to help determine when a wellness program is part of a group health plan: (1) the wellness program is offered only to participants in the plan, (2) incentives are tied to cost sharing or premiums, (3) the program is offered or administered by a vendor that has contracted with the plan or its health insurance issuer, and (4) the wellness program is a term of the group health plan. Id. § 1630.14(d)(5). If the rule is finalized, employers may need to substantially reorganize many wellness programs to take advantage of this safe harbor, including by altering the types of incentives that are offered and by limiting incentives to employees who participate in the group health plan.

The NPRM says a water bottle or gift card of “modest” value would qualify as de minimis, but a reward of $50/month ($600/year) would not qualify.

GINA

Under the GINA proposed rule, de minimis incentives would be permitted for health information of the employee’s family members (which constitutes genetic information of the employee), but the proposed rule differs from the 2016 rule in not permitting employers to provide higher-than-de minimis incentives for the health information of an employee’s spouse (which constitutes genetic information of the employee under GINA, even if that is not scientifically true). Compare proposed 29 C.F.R. § 1635.8(b)(2)(iii) with 29 C.F.R. § 1635.8(b)(2)(iii) (2017). As under the current rule, incentives are not permitted for an employee to provide his or her own genetic information; employee health risk assessments may seek family medical history of the employee (i.e., genetic information), but must make clear that any incentive offered for completing the assessment does not depend on the employee answering the family medical history questions.

Conclusion

If these rules are finalized, employers, health insurance issuers and wellness vendors may need to reconfigure wellness programs to reduce incentives, integrate wellness programs with group health plans, and/or eliminate financial incentives for disability-related or genetic information or for medical examinations. Even before the rules are finalized, employers could consider the EEOC’s position as they evaluate how to comply with the existing statutory requirements.

1 EEOC Provides Proposed Wellness Rules for Review, https://www.eeoc.gov/newsroom/eeoc-provides-proposed-wellness-rules-review (Jan. 7, 2021).

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