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Wellness Program - Key Concerns for Evolving Compliance

1.31.2017

Wellness programs are an increasingly popular way for employers to encourage their workforce to pursue a healthier lifestyle. Partly because of their rising popularity, various rules have developed in recent years to ensure wellness participants are treated fairly. Two sets of rules were released by the Equal Employment Opportunity Commission (EEOC) in May of 2016 and became effective for plan years beginning on or after January 1, 2017. These rules warrant further discussion in light of key compliance issues we are seeing.

EEOC – ADA REGULATIONS

One set of rules explains what constitutes a “voluntary” program under the Americans with Disabilities Act (ADA) and applies to any wellness program that includes disability-related inquiries or medical examinations (i.e. most programs involving a health risk assessment and any program involving a biometric screening). The ADA regulations contained much of what was to be expected regarding confidentiality of health information and reasonable design parameters; and much attention has been drawn to the incentive limitations that are more restrictive than those under other wellness rules. However, what is often overlooked are the new notice requirements and clarification on prohibited retaliatory action.

In particular, the final regulations require employers to provide a notice that clearly communicates program-specific information on what medical information will be obtained, who will receive the medical information, how the medical information will be used, and how the employer will prevent improper disclosure of medical information. This disclosure must be made sufficiently prior to obtaining health information from the employee to allow the employee time to assess whether he/she wants to participate in the wellness program.

Further, the EEOC continues to take the position that the ADA's safe harbor for insurance does not apply to an employer's decision to offer rewards or impose penalties, and it will be important for employers to watch how this area of the law develops in the courts. Many employers condition enrollment in certain health benefits on participation in wellness programs subject to the EEOC’s rules, which the EEOC clearly considers inappropriate.

EEOC – GINA REGULATIONS

The second set of rules, issued under the Genetic Information Nondiscrimination Act (GINA), allows employers to incentivize the disclosure of an employee spouse’s manifestation of diseases given certain conditions. Unfortunately, these regulations are not as helpful as many employers believe them to be.

While it’s true that the EEOC will now permit an employer to incentivize the disclosure of a limited amount of genetic information, it is important to remember that an entirely separate set of rules apply to wellness programs associated with a health plan. At this time, such rules prohibit group health plans (including the wellness programs associated with them) from incentivizing the disclosure of genetic information. This means that your standard program that includes a premium reduction incentive cannot take advantage of the EEOC’s new rules.

CONCLUSION

As the rules governing wellness programs grow increasingly complex, it is even more important for employers to assess their programs for compliance. Any employer sponsoring a wellness program including an HRA or biometric screening should carefully assess its program structure and materials to ensure appropriate disclosures and incentives are employed.

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