Employers which offer holistic wellness benefits that also address health goals should take note of new proposed rules by the Equal Employment Opportunity Commission.
Following an arduous regulatory path that involved litigation, the EEOC is reproposing rules that tackle what level of incentives employers may offer to encourage employee participation in wellness programs that require disclosure of medical information without violating the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).
The original rules were approved by the Commission in June 2020. Now the EEOC has submitted for publication in the Federal Register two Notices of Proposed Rulemakings (NPRM) to update its existing wellness program rules under the ADA and GINA.
The NPRMs respond to an August 2017 decision by the U.S. District Court for the District of Columbia that vacated a portion of EEOC’s previous ADA and GINA regulations.
As background, some employers offer incentives to encourage employees simply to participate in a wellness program, while others offer incentives for employees to complete an activity related to a health factor or to achieve health outcomes. Incentives can be framed as rewards or penalties and often take the form of prizes, cash, a reduction or increase in health care premiums or cost sharing, or payroll deductions.
Moreover, some employers offer employees’ family members the opportunity to participate in wellness programs. But when a wellness program collects medical information from an employee’s family members, GINA is implicated because information about diseases and disorders in family members is considered “genetic information.” Wellness programs must also comply with other laws enforced by the EEOC and with laws regulating group health plans when such programs are part of group health plans.
A final rule issued in 2016 attempted to harmonize with other federal rules authorizing wellness program incentives by adopting a 30% incentive limit. While the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act, allows employers to offer incentives up to 30% of the total cost of health insurance to encourage participation in certain types of wellness programs, the ADA requires that employee participation in a wellness program that includes medical questions and exams be “voluntary.”
Soon after the rule was issued, AARP filed a lawsuit arguing that the incentive limit was too high to give employees a meaningful choice on whether to participate in wellness programs that required them to disclose medical information to receive a reward or avoid a penalty. The district court agreed and found that the EEOC failed to provide sufficient explanation for adopting the 30% incentive limit from another federal law.
Since the ADA and GINA do not define “voluntary,” the EEOC, through the NPRMs, now proposes that employers may offer no more than a de minimis (insignificant) incentive to encourage participation in wellness programs that include inquiries about diseases or disorders. For example, the EEOC notes that a water bottle or a gift card of modest value for each participating family member would clearly be de minimis, but it invites comments on the types of incentives that should and should not be considered de minimis.
Certain wellness programs, however, will still be permitted to offer the maximum allowed incentive under HIPAA regulations issued in 2013.
Following publication in the Federal Register, a 60-day public comment period will be open for interested stakeholders.
In the meantime, unofficial versions of the NPRMs are available here:
