Group Questions EEOC’s Authority on Wellness Program Rule

The HR Policy Association says the proposed rule will discourage wellness program innovation and increase the potential for litigation.

In a comment letter to the Equal Employment Opportunity Commission (EEOC), the HR Policy Association asks the agency to clarify that employers can offer financial incentives up to 30% for family coverage and up to 50% for smoking cessation programs that screen for tobacco use, and to remove “subjective and ill-defined” requirements that the association says will discourage wellness program innovation and increase litigation.

The association questions the EEOC’s statutory authority under the Americans with Disabilities Act (ADA) to change the criteria for when a wellness program is “reasonably designed to promote health or prevent disease.”  However, Association President and General Counsel Daniel V. Yager said, “It is clear under the ADA, that the EEOC does not have the authority to ‘prohibit or restrict’ employers from establishing or administering the terms of a bona fide group health plan.”

The proposed rule from the EEOC says an employee health program that includes disability-related inquiries or medical examinations (including disability-related inquiries or medical examinations that are part of a health risk assessment) is voluntary as long as an employer “does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation or limit the extent of such coverage (except pursuant to allowed incentives).” 

The association says these standards will have a significant impact on gated group health plans where employees are offered different levels of health insurance coverage tied to completion of a health assessment, wherein each level—even the most “basic”—constitutes sufficiently full coverage. The proposed rule improperly restricts the ability of employers to administer the terms of these bona fide group health plans, the association contends.

Prior rules allowed for an incentive of up to 50% of the cost of employee-only coverage for employees who successfully complete smoking cessation programs, but the proposed rules only allow for an incentive up to that amount if the employer simply asks the employee if he stops smoking, not if a blood test for nicotine is required. The Association says the proposed rule significantly limits incentives for smoking cessation programs which the Patient Protection and Affordable Care Act (ACA) and its implementing regulations clearly intended to expand. 

In general, the proposed rules say that employers are allowed to offer both financial and in-kind incentives in the form of a reward or penalty totaling no more than 30% of the cost of employee-only coverage—a reduction in the incentive amount allowed by current rules, which calculate the incentive based on total cost of family coverage. “The proposed rule appears to inappropriately and unfairly limit the financial incentives for wellness programs to 30% of ‘employee-only’ coverage insofar as it does not discuss how the ADA applies to the financial incentives for family coverage that are allowed under the ACA,” the HR Policy Association says.

The HR Policy Association’s comment letter is here.