Almost two years ago, the ACA enforcement agencies jointly published a set of lengthy, detailed, final rules applying the ACA’s enhanced health status discrimination prohibition to employer-administered wellness incentives. On April 16, 2015, the EEOC declared those rules insufficient to satisfy the Americans with Disabilities Act, proposing enhanced ADA rules to be codified at 29 CFR § 1630.14. Though much of the lingo is the same, the EEOC rules expose employers to ADA liability for administering wellness incentives that comply with the final ACA rules. We’ll hit just a few highlights here.
The regulatory amendments fill just three of the publication’s forty-four pages, bookended by a thirty-page preamble and a ten-page guidance appendix. It’s always important to study the preamble before reading the rules and we have, but our space and your time is limited, and much of the preamble reappears in the appendix, so we’ll quote the new rule text, then cut to the guidance.
1630.14 Medical examinations and inquiries specifically permitted.
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(d) * * *
(1) Employee health program. An employee health program, including any disability-related inquiries or medical examinations that are part of such program, must be reasonably designed to promote health or prevent disease. A program satisfies this standard if it has a reasonable chance of improving the health of, or preventing disease in, participating employees, and it is not overly burdensome, is not a subterfuge for violating the ADA or other laws prohibiting employment discrimination, and is not highly suspect in the method chosen to promote health or prevent disease.
(2) Voluntary. An employee health program that includes disability-related inquiries or medical examinations (including disability-related inquiries or medical examinations that are part of a health risk assessment) is voluntary as long as a covered entity:
(i) Does not require employees to participate;
(ii) Does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation, or limit the extent of benefits (except as allowed under paragraph (d)(3) of this section) for employees who do not participate;
(iii) Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of Section 503 of the ADA, at 42 U.S.C. 12203; and
(iv) Where a health program is a wellness program that is part of a group health plan, provides employees with a notice that:
(A) Is written so that the employee from whom medical information is being obtained is reasonably likely to understand it;
(B) Describes the type of medical information that will be obtained and the specific purposes for which the medical information will be used; and
(C) Describes the restrictions on the disclosure of the employee’s medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the measures set forth in the HIPAA regulations codified at 45 CFR parts 160 and 164).
(3) Incentives offered for employee wellness programs that are part of a group health plan. The use of incentives (financial or in-kind) in an employee wellness program, whether in the form of a reward or penalty, together with the reward for any other wellness program that is offered as part of a group health plan (as defined in 29 USC 1191b(a)), will not render the program involuntary if the maximum allowable incentive available under the program (whether the program is a participatory program or a health-contingent program, or some combination of the two, as those terms are defined in regulations at 26 CFR 54.9802-1(f)(1)(ii) and (iii), 29 CFR 2590.702(f)(1)(ii) and (iii), and 45 CFR 146.121(f)(1)(ii) and (iii), respectively) does not exceed 30 percent of the total cost of employee-only coverage.
Guidance begins by warning that calling something an “employee health program” won’t make it so. For example –
Conducting a HRA and/or a biometric screening of employees for the purpose of alerting them to health risks of which they may have been unaware would meet this standard, as would the use of aggregate information from employee HRAs by an employer to design and offer health programs aimed at specific conditions that are prevalent in the workplace. An employer might conclude from aggregate information, for example, that a significant number of its employees have diabetes or high blood pressure and might design specific programs that would enable employees to treat or manage these conditions. On the other hand, collecting medical information on a health questionnaire without providing employees follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design programs or treat any specific conditions, would not be reasonably designed to promote health. Additionally, a program is not reasonably designed to promote health or prevent disease if it imposes, as a condition to obtaining a reward, an overly burdensome amount of time for participation, requires unreasonably intrusive procedures, or places significant costs related to medical examinations on employees. A program also is not reasonably designed if it exists mainly to shift costs from the covered entity to targeted employees based on their health.
EEOC then does the math on the 30% limitation. If the all-in, annual premium for employee-only coverage is $5,000, then the 30% limit is $1,500. So, offering $250 for completing a health assessment and $1,500 for satisfying a health-contingent standard would be unlawful, even though each type of incentive complied with the rules for that type of incentive.
Smoking cessation incentives get more deference, as under the ACA rules. Excluding them from the “disability-related inquiries or medical examinations” targeted by the ADA, the EEOC frees employers to “offer incentives as high as 50 percent of the cost of employee coverage for that smoking cessation program, pursuant to the regulations implementing HIPAA, as amended by the Affordable Care Act, without implicating the disability-related inquiries or medical examinations provision of the ADA.”
The guidance also warns that ADA accommodation obligations may exceed employer ACA obligations to offer alternatives to employees who cannot satisfy health-contingent award standards and may require, “a reasonable accommodation for a participatory program even though HIPAA and the Affordable Care Act do not require such programs to offer a reasonable alternative standard.”
The guidance also cautions against making, “individuals who handle medical information that is part of an employee health program . . . responsible for making decisions related to employment, such as hiring, termination, or discipline.” EEOC recommends using a third party to reduce, “the risk that medical information will be disclosed to individuals who make employment decisions, particularly for employers whose organizational structure makes it difficult to provide adequate safeguards.” Alternatively, “Employers that administer their own wellness programs need adequate firewalls in place to prevent unintended disclosure.”