This is the second in a series of blogs on the new final ADA and GINA rules for wellness programs. In our first blog, we noted that certain wellness programs are permitted by the ADA if they are voluntary. We begin this blog with a discussion of what it means for a wellness program to be voluntary.
Voluntary Participation and Incentives
For a wellness program to be considered voluntary under the ADA, the employer:
- may not require employees to participate, deny access to health coverage for nonparticipation, generally limit coverage under its health plans, take any other adverse action; or retaliate, interfere with, coerce, intimidate, or threaten an employee who does not participate or fails to achieve certain health outcomes; and
- 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. The EEOC has promised to post an example of a compliant notice on its website prior to June 17, 2016.
Originally (i.e., prior to the publication of the proposed rule), the EEOC took the view that any financial penalty for non-participation or failure to meet a goal would render the program involuntary. In the proposed and final rule the EEOC has rethought its position and concluded that an employer may offer incentives up to a maximum of 30 percent of the total cost of self-only coverage (including both the employee’s and employer’s contribution) without causing a wellness program to be classified as involuntary.
For purposes of this limitation, the term “incentives” should be understood to include both rewards and penalties and rewards that are in-kind as well as financial. Employers may use any reasonable method of valuing its in-kind incentives. However, even “de minimis” incentives must be counted toward the 30% maximum.
This leaves the question of which plan an employer should use to calculate the 30% limit. The rule details the choice of plan as follows:
- Where participation in a wellness program depends on enrollment in a particular group health plan or plans, the limit is 30% of the total cost for self-only coverage under the plan in which the employee is enrolled.
- Where an employer offers a single group health plan, but participation in a wellness program does not depend on the employee’s enrollment in that plan, the limit is 30% of the total cost for self-only coverage under that plan.
- Where an employer has more than one group health plan, but participation in a wellness program does not depend on the employee’s enrollment in any plan, the limit is 30% of the total cost of the lowest cost self-only coverage under a major medical group health plan offered by the employer.
- Where an employer does not offer a group health plan or group health insurance coverage, the rule uses the cost of the second lowest cost Silver Plan available through the state or federal health care Exchange established under the Affordable Care Act in the location that the employer identifies as its principal place of business as a benchmark for setting the incentive limit. Thus, the limit is 30% of the cost that would be charged for self-only coverage under such a plan if purchased by a 40-year-old non-smoker.
The reader will have noticed that we have said nothing about incentives related to participation by an employee’s spouse or dependents. This is because the ADA does not govern this aspect of wellness programs. However, GINA – also regulated by the EEOC – does reach it and the reader (spoiler alert) should not be surprised to find that final wellness rules under GINA incorporate incentive limits that look very much like those that apply under the ADA.
As part of its discussions on incentive limitations, the EEOC reminds employers that the reasonable accommodation rules apply, regardless of whether a wellness program is otherwise subject to the final rule. Interpretive guidance to the final rule offers the following illustrations:
- an employer that offers employees a financial incentive to attend a nutrition class, regardless of whether they reach a healthy weight as a result, would have to provide a sign language interpreter so that an employee who is deaf and who needs an interpreter to understand the information communicated in the class could earn the incentive.
- an employer would have to provide written materials that are part of a wellness program in an alternate format, such as in large print or on computer disk, for someone with a vision impairment.
- an employer that offers a reward for completing a biometric screening that includes a blood draw would have to provide an alternative test (or certification requirement) so that an employee with a disability that makes drawing blood dangerous can participate and earn the incentive.
An employer may obtain information collected as part of an employee health program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals as is necessary to administer the plan. While the ADA provides that information gathered in the course of providing employees with voluntary health services may be disclosed to managers and supervisors in connection with necessary work restrictions or accommodations, the EEOC makes the point that “such an exception would rarely, if ever, apply to medical information collected as part of a wellness program.” It also notes that wellness programs that are considered health plans under HIPAA would also be subject to the latter’s rules on privacy and security. It allows that a program that meets HIPAA’s requirements would likely pass muster under the ADA.
Finally, an employer may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information (except to the extent as necessary to carry out specific activities related to the wellness program), or waive confidentiality protections available under the ADA as a condition for participating in a wellness program or receiving a wellness program incentive.
Next up, we begin our discussion of the GINA final rules.