eLABORate: EEOC Publishes Proposed Rule on Use of Voluntary Wellness Plans and the ADA

April 20, 2015

The Equal Employment Opportunity Commission (“EEOC”) has published a Notice of Proposed Rulemaking, which opens for comments on April 20, 2015. The proposed rule would make changes to 29 CFR section 1630.14, Medical Examinations And Inquiries Specifically Permitted. It attempts to reconcile incentives for voluntary wellness programs under 29 CFR section 1630.14(d) with Title I of the Americans with Disabilities Act (“ADA”).

Currently, section 1630.14(d) permits covered entities to provide additional voluntary medical examinations, referred to as wellness programs. Wellness programs are voluntary programs usually associated with an employer’s group health plan. These wellness programs assess an employee’s general health to determine health risk factors and provide overall health guidance such as nutrition information. Employers often offer financial incentives to employees for participating in wellness programs or for having a certain outcome in wellness program examinations. When wellness programs include disability-related inquires and/or medical examinations, employers might run into issues with the ADA if these incentives act as a hidden requirement or are coercive. According to the EEOC, this can happen when the incentives are so high as to effectively render health insurance coverage unaffordable under the Affordable Health Care Act.

The ADA limits the medical information an employer is entitled to require from an employee. However, the ADA contains an exception for medical information an employee chooses to disclose voluntarily through a voluntary medical examination that is part of an employer’s health program. The EEOC says that when the incentives to participate in wellness programs rise to such a financial level that they could be described as coercive, there is a question as to whether participation in wellness programs is actually voluntary. The EEOC takes the position that a plain language reading of this exception requires any incentive to be de minimis, which would make many wellness program incentives unlawful under the ADA. The EEOC’s proposed rule would allow employers to provide employees with incentives to participate in wellness programs without violating federal law.

While the rule incorporates several changes, employers should be aware of three main changes that define what the EEOC would consider an allowable voluntary wellness program. First, under the proposed rule, the program must be voluntary. The proposed rule would define voluntary as a program that does not require participation, may not deny coverage based on participation, and one where an employer may not take any adverse action against an employee who opts not to participate.

Second, the program must be reasonably designed to promote health or prevent disease. Programs that meet this standard would “have a reasonable chance of improving the health of, or preventing disease in, participating employees.” Such a program may not be a cover for an ADA violation. The new rule would include examples of programs that fall within this standard.

Third, an employee’s participation must be deemed voluntary, meaning the employee receives information which clearly explains “what medical information will be obtained, how the medical information will be used, who will receive the medical information, the restrictions in its disclosure, and the methods the covered entity uses to prevent improper disclosure of medical information.”

Additionally, the proposed rule would put a cap on allowable incentives, making incentives that fall within the proposed rule permissible under the ADA, according to the EEOC. Any incentive would be limited to 30 percent of the total cost of employee-only coverage. These incentives could be in the form of a reward or a penalty.

Lastly, the proposed rule would add a provision to subsection 1630.14(d) which would limit an employer’s access to information from wellness programs to only aggregate numbers, as long as there is no reasonable probability the numbers would reveal any information pertaining to an individual employee. The EEOC believes there may be a risk of disclosure of individual identities with small employee populations.

While the EEOC invites comments pertaining to any part of the proposed rule, the EEOC has requested comments on a list of six specific issues. Generally, those issues are:

  1. whether the proposed rule reaches the goal of reconciling “voluntary” as defined under the ADA with the Affordable Care Act wellness programs;
  2. whether the notice requirements should include written and knowing confirmation from a participating employee, and if so, what should be included in the confirmation;
  3. whether the notice requirement should apply only to wellness programs that offer more than a de minimis incentive and require a response to disability-related inquiries;
  4. how the EEOC can guarantee that wellness programs promote health and do not create costs for employees;
  5. whether employers may, in the future, provide wellness programs outside of a group health plan and provide incentives to participate in such programs; and
  6. what the practical effect of the incentive limitations will be, especially with regard to wellness programs that promote reduced tobacco use.

 Now that the new rule has been promulgated, employers should review their wellness programs and their incentives in preparation for complying with whatever becomes the final rule. The comment period closes on June 19, 2015, and employers and employer-organizations, as well as individual citizens, can submit comments to the EEOC about their agreement, disagreement, or need for clarification with respect to the proposed rule. The proposed rule can be found here. Stay tuned for further developments.