Monday, April 20, 2015

EEOC issues balanced interpretation of legality of employer wellness plans

Several months ago, the EEOC announced its intent to issue regulations interpreting whether employer wellness plans are legal or illegal medical exams under the ADA. Thankfully, last Thursday the EEOC published its proposed regulations, and its good news for employers who use these programs to keep down the cost of their group health insurance.

So, what does this all mean for employers? Let’s take a look, via the helpful Q&A the EEOC published alongside its proposed regs:

Q: What is a Wellness Program?

A: The term “wellness program” refers to programs and activities typically offered through employer-provided health plans as a means to help employees improve health and reduce health care costs. Some wellness programs ask employees to engage in healthier behavior (for example, by becoming more active, not smoking, or eating better), while other programs obtain medical information from employees by asking them to complete a health risk assessment (HRA) or undergo biometric screening for risk factors (such as high blood pressure or cholesterol).

Q: How does the ADA affect workplace wellness programs?

A: The ADA generally restricts employers from obtaining medical information from employees but allows medical examinations of employees and inquiries about their health if they are part of a “voluntary” employee health program…. However, … the Affordable Care Act allows wellness programs to offer incentives—in the form of rewards to participating employees who achieve certain health outcomes or penalties if participating employees fail to achieve health outcomes.

The proposed rule clarifies that the ADA allows employers to offer incentives up to 30 percent of the cost of employee-only coverage to employees who participate in a wellness program and/or for achieving health outcomes.

Q: When is a wellness program considered “an employee health program” within the meaning of the ADA?

A: 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 employment discrimination, or highly suspect in the method chosen to promote health or prevent disease. For example:

  • Asking employees to complete a HRA or have a biometric screening for the purpose of alerting them to health risks (such as having high cholesterol or elevated blood pressure) is reasonably designed to promote health or prevent disease.
  • Collecting and using aggregate information from employee HRAs to design and offer programs aimed at specific conditions prevalent in the workplace (such as diabetes or hypertension) also would meet this standard.

However, asking employees to provide medical information on a HRA without providing any feedback about risk factors or without using aggregate information to design programs or treat any specific conditions would not be reasonably designed to promote health.

Q: When is a health program considered “voluntary”?

A: The NPRM lists several requirements that must be met in order for participation in employee health programs that include disability-related inquiries or medical examinations to be voluntary. Specifically, an employer:

  • may not require employees to participate;
  • may not deny access to health coverage or generally limit coverage under its health plans for non-participation; and
  • may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees (such as by threatening to discipline an employee who does not participate or who fails to achieve certain health outcomes).

Additionally, if a health program is considered a wellness program that is part of a group health plan, an employer must provide a notice clearly explaining what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.

Here’s the $64,000 question:

Q: How much of an incentive may employers offer to encourage employees to participate in a wellness program or achieve certain health outcomes?

A: 30 percent of the total cost of employee-only coverage.

I am thrilled that the EEOC did not go nuclear and blow up wellness programs as discriminatory under the ADA. Given the surging cost of health insurance and the massive burden those costs place on employers and employees, it is relief that the EEOC is leaving these beneficial programs intact. Moreover, the EEOC’s 30% hard cap is certainly more palatable than a fuzzy “reasonableness” standard that begs for litigation and uncertainty. While both employers and employees can quibble over whether 30% is too low, too high, or just right, I’d rather have this Goldilocks debate over a number we can see than a different debate over a fuzzy standard that we cannot.

A full copy of the proposed regulations is available here [pdf].