EEOC Sets Limits on Wellness Program Incentives
In its final rule released this month, EEOC seeks to clarify how employers can structure wellness program incentives without running afoul of the Americans with Disabilities Act. At the heart of the matter is the meaning of “voluntary health program,” the ambiguity of which MAPI has previously covered. With this clarity comes more complexity, however.
In the new rule, EEOC defines “voluntary health program,” provides guidance about the incentives employers may offer to employees, and explains how the ADA, HIPAA, and ACA interact on the subject of wellness programs. The final rule applies to “all wellness programs that include disability-related inquiries and/or medical examinations,” even though the requirements in HIPAA and the ACA apply only to those part of a group health plan. It does not apply to programs that merely provide incentives based on participation or health outcomes.
An important part of the final rule is that wellness programs must be “reasonably designed to promote health or prevent disease.” A program would not meet this standard if it entailed an “overly burdensome” time commitment, “unreasonably intrusive procedures,” or “significant costs” for examinations. In an FAQ, EEOC provides examples of programs that would and would not meet the standard.
Voluntary vs. Involuntary
To ensure a program is voluntary, employers may not make employee participation compulsory, deny health coverage (or particular plans) to nonparticipating employees, or retaliate or take adverse actions against employees who choose not to participate or who do not meet specific health outcomes. The final rule also mandates disclosure of what medical data will be tracked, how it will be used, and who will have access to it.
The allowable incentives vary based on how many plans the employer offers and whom the programs are available to:
- Employers can offer employees a maximum incentive of 30% of the total cost for self-only coverage if the wellness program is open just to those enrolled in a specific plan.
- When an employer has multiple plans and the wellness program is available to all employees, the maximum incentive is 30% of the lowest-cost major medical self-only plan.
- For employers that do not offer health insurance but do have a wellness program, the maximum incentive is 30% of what a “40-year-old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care Exchange in the location that the employer identifies as its principal place of business.”
Confidentiality of Medical Information
The final rule adds two requirements to EEOC’s ADA regulations. One is that an employer (or other “covered entity”) may receive information only in an aggregate form that does not disclose the identities of individuals except where required to administer the health plan. The other is that an employer may not force an employee to waive ADA confidentiality protections or agree to the disclosure of medical information as a requirement for participating in the wellness program or obtaining the incentive (“except to the extent permitted by the ADA to carry out specific activities related to the wellness program”).
Spouses of Employees
EEOC also issued a final rule to amend part of the Genetic Information Nondiscrimination Act. It clarifies that employers may offer limited incentives for employees’ spouses to share information about their health as part of voluntary wellness programs. The rule concerns only wellness programs through which employers tie part of the incentive to a medical questionnaire or examination. As with the other incentive limits, the amount varies based on the employer’s insurance offerings.
The incentive limits and notice requirements apply to a wellness program on the first day of the new plan year that begins after January 1, 2017.
MAPI Members Surveyed About Wellness
In a January 2016 survey of 39 members of MAPI’s Human Resources Council, 87% of respondents reported offering a wellness program. Within that group, 68% extend the program to spouses and 44% measure the program’s return on investment. The types of data tracked include:
- a health index of employees;
- healthcare costs compared with market trends;
- participation rate in preventative screenings; and
- projected reduction in catastrophic claims.
The full survey is available to members of the HR Council.