On April 16, 2015, the U.S. Equal Employment Opportunity Commission (“EEOC”) finally released proposed regulations that would allow many workplace wellness programs to operate without violating the Americans with Disability Act (“ADA”). As summarized in earlier Legal Updates, the EEOC filed several lawsuits last year alleging that some very common wellness programs violated the ADA even though they complied with the Affordable Care Act and other traditional employee benefits laws. See our August 2014 Legal Update and our October 2014 Legal Update.

The EEOC’s decision to attack common wellness programs frustrated many employers who believed portions of the Affordable Care Act indicated that Congress fully supported the idea of using wellness programs to control employer health plan costs. In filing their lawsuits, the EEOC argued that some of the most common wellness program tools (e.g., health risk assessments with biometric screening) are actually a form of medical examination which requires that the wellness program be “voluntary” under the ADA. The EEOC lawsuits specifically challenged whether the particular wellness programs were truly voluntary if employees would be penalized for not participating.

The proposed regulations recognize a distinction between participatory and health-contingent wellness programs. Participatory programs that do not require specific health-related information or results are generally permissible and exempt from the EEOC’s proposed regulations. Some examples of participatory wellness programs would include incentives for merely attending healthy eating, smoking cessation or weight-loss classes. In contrast, health-contingent programs still require careful analysis under the ADA. An example of a health-contingent program would include a wellness program that provides incentives based upon health-risk assessments or biometric screening. Those wellness programs are subject to the higher standards under the proposed regulations.

The EEOC’s proposed regulations explain that, to be voluntary, a health-contingent wellness program must not:

• Require employees to participate;
• Deny coverage or certain benefits for non-participation, except pursuant to permissible incentives; or
• Take any adverse employment action against, interfere, coerce, threaten, or intimidate employees.

The proposed regulations provide employers with some much needed guidance regarding the second and third bullet points above. Consistent with the Affordable Care Act, the EEOC’s proposed regulations allow an employer to offer “incentives,” whether imposed as a reward or a penalty, provided that the maximum incentive available under all health-contingent program incentives is no more than 30 percent of the total cost of employee-only coverage.

While the proposed regulations provide much needed guidance regarding financial incentives and penalties, they also create some additional requirements for health-contingent wellness programs. Namely, the proposed regulations specify that the permissible medical examinations and inquiries must have a reasonable chance of improving the health of, or preventing diseases in, participating employees, and that they not be overly burdensome, a subterfuge for violating discrimination laws, or “highly suspect.” The proposed regulations specifically prohibit wellness programs that: (1) provide no follow-up information or advice after collecting medical information; (2) overly burden employees with the time it takes to participate; (3) utilize unreasonably intrusive procedures; (4) place significant medical costs on employees; and (4) exist to shift costs from the employer to certain employees based on their health.

Finally, the proposed regulations add a new and cumbersome notice requirement for any wellness program that is offered in conjunction with a group health plan. Under this requirement, health plan participants would need to receive a formal notice. The notice must explain what medical information will be collected, how it will be used, who will have access to the information and the steps that the plan will take to ensure that the information is not disclosed improperly to anyone else. This notice is beyond the standard Department of Labor and Health Insurance Portability and Accountability Act requirements that also apply to the plan.

Though the EEOC’s regulations are not in final form, they are at least an indication of what the final rules will look like. They highlight the fact that employers will need to navigate a maze of legal requirements under multiple laws and guidance from several federal agencies in order to maintain compliant wellness programs. The proposed rules are subject to a 60 day comment period.

If you have questions about your own wellness program or would like to design and implement a new plan that complies with recent changes in the law, please contact Matthew Flanary at mflanary@buelowvetter.com or 262-364-0253, Brett Schnepper at bschnepper@buelowvetter.com or 262-364-0262, or your Buelow Vetter attorney.