Tags: Wellness Plans

Over the past three years, we have seen several landmark cases that have shifted the rules regarding wellness plan incentives and employee “voluntary participation” back and forth. 

The positive news is that the Department of Labor, and specifically the EEOC, seems to have swung to the right over the past year.  They are now generally supportive of wellness programs, especially with a Republican majority now in Washington, and employers’ ability to implement “incentives” for voluntary participation with some clear restrictions.  However, with the recent ruling made on August 22, 2017 in the AARP vs EEOC case, federal district court Judge John Bates concluded that the commission had failed to adequately justify its conclusion that incentives and penalties of up to 30 percent of the cost of an employee’s health insurance coverage does not render plan participation “involuntary”; so the commission will have to go back and try again. This decision is significant because it could limit the incentives employers offer to induce employees to participate in wellness programs.  In addition, the court found that the multiple conflicts between HIPAA, GINA, PPACA and ADA must be adequately resolved by the agency.

In response to the court’s ruling, the EEOC announced a timeline on October 3 for alterations that extend into 2021.  The agency will issue a proposed rulemaking notice by August 2018 and a final rule by October 2019.  To give employers more time to digest the rule, it likely won't be applicable until sometime in 2021.  The agency states that the 2016 rule is still effective and therefore employers can continue operating their wellness programs under last year's mandate. 

So, what is a company with a wellness program in place to do during this interim period?  The guidelines defined by the EEOC in 2016 are likely the best roadmap to use until such time that the EEOC provides further guidance in 2021.  Specifically, the guidelines state:

  • Programs must be voluntary and nondiscriminatory. Specifically, an employer:
    • may not require any employee to participate;
    • may not deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan; and
    • may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
  • Additionally, in order to ensure that an employee's participation is voluntary, an employer must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.
  • The ADA limits the circumstances in which employers may ask employees about their health or require them to undergo medical examinations. It allows such inquiries and exams if they are voluntary and part of an employee health program. Workers, however, can’t be required to participate in such programs, and they can’t be denied health coverage or disciplined if they refuse to participate.
  • The ADA and GINA generally prohibit employers from obtaining and using information about employees’ health conditions or about the health conditions of their family members, including spouses. Both laws, however, allow employers to ask health-related questions and conduct certain medical examinations, such as biometric screenings to determine risk factors, as part of a voluntary wellness program.
  • ADA allows employers to make disability-related inquiries (for example, by asking employees to complete a HRA) and require medical examinations that are part of a voluntary employee health program.
  • The final rule retains the requirement in the proposed rule that an employee health program -- including any disability-related inquiries or medical examinations that are part of such a program -- must be "reasonably designed to promote health or prevent disease."
    • To meet this standard, a program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or require employees to incur significant costs for medical examinations.
  • Under HIPAA as amended by the ACA, wellness programs may continue to offer incentives of up to 30 percent of the cost of an individual’s annual health premiums, and for tobacco-cessation programs, up to 50 percent of the cost of health premiums.
    • Where the employer requires the employee to be enrolled in a particular health plan in order to participate in the wellness program, the incentive to the employee may not exceed 30 percent of the total cost of the self-only version of the plan in which the employee is enrolled.
    • Where the employer offers more than one self-only health plan, and does not require the employee to be enrolled in a particular health plan in order to participate in the wellness program, the incentive may not exceed 30 percent of the lowest cost major medical self-only plan the employer offers.
    • Where the employer does not offer a health plan, and offers a wellness program that is open to employees, the incentive may not exceed 30 percent of the total cost to a 40-year-old nonsmoker purchasing self-only coverage under the second-lowest cost Silver Plan available on the state or federal exchange in the location that the employer identifies as its principal place of business.
    • In addition, the final GINA rule provides that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30 percent of the total cost of self-only coverage, the same incentive allowed for the employee.
    • Under the EEOC final rules, these caps apply to incentives for both program participation and to outcomes-based goal achievements, such as meeting weight-reduction targets

Stay tuned for Part two of this blog that discusses wellness programs as they apply to tobacco use, HIPAA regulations, safe harbor provisions, and employee confidentiality information. For more information on EEOC regulations, visit our website or check our this article on Preventing Harrassment in the Workplace.

 For help with navigating the legal landmines that surround an effective wellness program, contact the Goosmann Law Firm. Feel free to stop in or call one of our Sioux City, Sioux Falls, or Omaha law firms.


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