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EEOC releases final rules on employer wellness program incentives
By Lauren Daming on May 17, 2016 at 1:14 PM

On May 16, 2016 the EEOC issued final rules amending the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) with respect to employer wellness programs. These changes clarify that employers may use incentives to encourage participation in wellness programs that include disability-related inquiries and/or medical examinations as long as the programs are voluntary and the incentives do not exceed certain limits. Additionally, the rules confirm that employers may provide incentives when employees’ spouses—but not children—provide certain health information.

Which wellness programs qualify?

An employee health program must be reasonably designed to promote health or prevent disease. In other words, the program must have a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a pretense for violating the ADA, GINA or other applicable nondiscrimination laws, or highly suspect in the method chosen to promote health or prevent disease. For example, conducting biometric screenings for the purpose of alerting employees to health risks that they may be unaware of would qualify as an employee health program. However, collecting medical information from employees on a health questionnaire without providing follow-up advice or using the information to design a program to treat specific conditions would not qualify as an employee health program. A program will not qualify as an employee health program if it excessively burdens employees in terms of costs or time required for their participation or if the program exists mainly to shift costs from employers onto targeted employees based upon their health. Additionally, a program will not qualify if it imposes a penalty on an individual whose spouse’s manifestation of disease or disorder prevents the spouse from participating or from achieving a certain health outcome.

What makes an employee health program voluntary?

In order for an employee health program that includes disability-related inquiries and/or medical examinations to be considered voluntary, the program must meet all of the following requirements:

  • Does not require employees to participate;
  • Does not deny coverage or limit coverage for employees who do not participate (except to the extent of allowed incentives);
  • Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate or threaten employees who choose not to participate in the employee health program or who fail to achieve certain health outcomes; and
  • Provides employees with a notice that meets the notice requirements specified in the rule.

What incentives may employers offer for participation?

In general, the use of limited incentives (which include both financial and in-kind incentives, such as time-off awards, prizes or other things of value) in a wellness program will not render a wellness program involuntary. However, the total allowable incentive for a wellness program that involves asking disability-related questions and/or conducting medical examinations (such as having employees complete a health risk assessment) may not exceed 30 percent of the total cost of employee-only coverage. For example, if a group health plan under which an employee is enrolled has a total annual premium for employee-only coverage of $6,000 (which includes both the employer’s and employee’s contributions toward coverage), the maximum allowable incentive is $1,800.

Employers may offer an inducement, not to exceed 30 percent of the total cost of employee-only coverage in exchange for individuals who complete risk assessments that include questions about family medical history or other genetic information; the same inducement may be offered for employees’ spouses who provide information about the spouse’s manifestation of disease or disorder as part of a health assessment. Inducements may not be offered to employee spouses who provide their genetic information, including results of genetic tests, or to employee children who provide their health information.

Importantly, the 30 percent limit only applies to programs that ask participants to answer disability-related inquiries, take medical examinations, or provide information regarding family medical history or genetic information. Programs that do not include these requirements, such as attending smoking cessation, weight loss, or nutrition classes, have no limit on incentives available for participation or achievement of an outcome.

How are the ADA’s reasonable accommodation requirements impacted?

All employee health programs are prohibited from discriminating against employees with disabilities. Absent undue hardship, employers must provide reasonable accommodations to enable employees with disabilities to fully participate in employee health programs and earn any reward or avoid any penalty that is part of an employee health program. For example, an employer that offers a financial incentive for employees to attend a nutrition class would be required to provide a sign language interpreter so that an employee who is deaf could earn the incentive.

The final rules will go into effect beginning in 2017. For more information regarding the final rules or for assistance in designing a wellness program that complies with the final rules and other applicable law, contact the attorneys in our Employment & Labor Practice Group.

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