EEOC Issues Proposed Rule for Wellness Programs

The proposed rule focuses on limiting incentives, protecting against discrimination and protecting privacy.

The U.S. Equal Employment Opportunity Commission (EEOC) published a Notice of Proposed Rulemaking (NPRM) describing how Title I of the Americans with Disabilities Act (ADA) applies to employer wellness programs that are part of group health plans.

The agency notes that although 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. The NPRM further requires that if an employee health program seeks information about employee health or medical examinations, the program must be reasonably likely to promote health or prevent disease. According to the EEOC, asking employees to provide medical information on a health risk assessment without providing any feedback about risk factors or without using aggregate information to design programs or treat any specific conditions would not be reasonably designed to promote health.

Employees must not be required to participate in a wellness program, and employers may not deny access to health coverage or generally limit coverage under its health plans for non-participation. Employers also may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees (such as by threatening to discipline an employee who does not participate or who fails to achieve certain health outcomes).

The proposed rule says the maximum allowable incentive an employer can offer employees for participation in a wellness program or for achieving certain health outcomes, and the maximum allowable penalty an employer can impose on employees who do not participate or achieve certain health outcomes, is 30% of the total cost of employee-only coverage. The total cost of coverage is the amount the employer and employee pay, not just the employee’s share of the cost.

For example, if a group health plan’s total annual premium for employee-only coverage (including both employer and employee contributions towards coverage) is $5,000, the maximum allowable incentive an employer could offer to an employee in connection with a wellness program that includes disability-related questions (such as questions on a health risk assessment) and/or medical examinations is $1,500 (30% of $5,000). The EEOC says this limit is generally consistent with limits that the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Patient Protection and Affordable Care Act (ACA), imposes on wellness programs.

Individuals with disabilities must be provided with reasonable accommodations that allow them to participate in wellness programs and to earn whatever incentive an employer offers.

The proposal, which includes interpretive guidance that will be published along with the final rule, requires that employers provide employees a notice that describes what medical information will be collected, with whom it will be shared, how it will be used, and how it will be kept confidential. The interpretive guidance also includes an extensive discussion of both legal requirements and best practices that ensure confidentiality of employee medical information.

After the EEOC filed several lawsuits challenging what it called “penalties” against employees who failed to participate in assessments or screenings for their employers’ wellness programs, employers and legislators called for clarity about how antidiscrimination laws related to wellness programs. The EEOC sent its Notice of Proposed Rulemaking to the White House Office of Management and Budget (OMB) for clearance on March 20.   

The agency is asking for comments on the NPRM that will shape the final regulation. In addition, it has asked a number of specific questions in the preamble to the NPRM on which it seeks comment before finalizing the rule. Methods for commenting are specified in the notice which will be posted in the Federal Register on Monday, April 20.

Text of the proposed rule is available here. In addition, the EEOC has made available a fact sheet for small businesses and a question and answer document for the general public.