As Santa was busy making a list and checking it twice, so too was the Equal Employment Opportunity Commission (EEOC), which was busy developing a naughty list of its own; on it, surprisingly, was employer-sponsored wellness programs! On December 7, the EEOC released a set of proposed rules seeking to limit the value of rewards that employees can earn for participating in any program that tracks their health data. Below, we take a look at the old laws and what, if any, changes you might have to make to your employee health programs should this one go the distance.
More than a decade ago, the Health Insurance Portability and Accountability Act (HIPAA) was amended as part of the Affordable Care Act (ACA) to allow employers to offer incentives of up to 30 percent of the total cost of an employee’s health insurance premiums (for self-coverage) tied to participation in health improvement activities. Noting the success of tobacco cessation programs and the reduction in health costs associated with quitting smoking, the policy allowed employees who participate in programs designed to prevent or reduce tobacco use to earn up to 50 percent of their individual coverage costs. However, AARP took the EEOC to court, claiming that the programs coerced employees to disclose information that would otherwise be protected under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA); The EEOC actually never revised its rule, despite being required to under a 2017 ruling by the district court for Washington DC, and thus these programs have lived in a legal limbo for the past three years.
Under the new rules, the EEOC would require employers to comply with ADA and GINA protections to offer employees only minimal incentives to encourage participation in any employee wellness program that collects employee health data. Under the first rule, the ADA states that “allowing too high of an incentive would make employees feel coerced to disclose protected medical information to receive a reward or avoid a penalty.” As such, they suggest that any wellness program that requires medical exams or requires participants to answer “disability-related inquiries” should offer “no more than de minimis incentives” to encourage participation. The GINA rules go one step further, with Ben Lupin, senior director in the health and benefits technical services unit at Willis Towers Watson, noting that “de minimis is defined with examples such as a water bottle or gift card of modest value.” The GINA rule does, however, seek comment on what should be considered “de minimis.”
Now, wellness programs that are offered as part of a group health plan appear to be largely unaffected by this rule. Specifically, under the ADA “safe harbor,” wellness programs that are part of, or qualify as, group health plans could still provide incentives of up to 30 percent of the total cost of the cost of the employee’s plan, provided they are compliant under HIPPA standards. To determine whether your wellness program qualifies for the exemption, it must be offered only to employees enrolled in an employer-sponsored health plan, must be offered by a vendor that has contracted with the group health plan or insurance issuer, and must have a term of coverage under the group health plan. In addition, any incentive offered must be tied to cost-sharing or premium differentials under the group health plan. Incentives to quit smoking may also be protected from the de minimis requirements provided the program is “strictly an incentive for tobacco-using employees to participate and does not ask any disability-related questions or require medical examinations.” The EEOC opened up the proposed rulings for public comment for 60 days. Experts expect comments to revolve around what is considered a de minimis incentive, as well as how closely wellness plans need to be tied to group health plans to dodge the incentive rules. Should the rules move forward, largely unchanged, those same experts suggest that employees will amend their wellness programs to take out health risk assessments and other surveys that might overstep ADA and GINA rules. While this won’t impact employers, it will make it more difficult for wellness programs to collect meaningful data on their populations and the impact of their programs, which in turn may make it harder for companies to justify their use.
You can trust that at Abel HR, we will be keeping an eye on the EEOC public comment period as well as any potential changes that may come down the pike as a result of the presidential election. Should significant changes be enacted, we will provide an update with how your wellness programs can be altered to remain compliant and stave off an EEOC lawsuit (or even an ADA or GINA lawsuit!)