Despite existing guidance available to employers under the Affordable Care Act (“ACA”) and the Health Insurance Portability and Accountability Act (“HIPAA”), employers have long faced uncertainty about the legality of their wellness programs under the Americans with Disabilities Act (“ADA”). While employers hoped that the Equal Employment Opportunity Commission (“EEOC”) would align any wellness rules it issued under the ADA with the ACA and HIPAA, that notion was attacked in mid-2014 when the EEOC began suing multiple large employers for wellness programs that allegedly violated the ADA.
 
Last month, after a lengthy and much anticipated wait, the EEOC finally issued proposed rules clarifying how Title I of the ADA, which prohibits employers from discriminating against applicants and employees with disabilities, applies to employee wellness programs that inquire about employees’ health or medical examinations. Although the proposed rules provide important guidance for employer-designed programs, the rules (which are not final) may ultimately reignite controversy over the legal and appropriate use of wellness incentives and the requisite “voluntary” nature of wellness programs.
 
Interplay of the ADA and Wellness Programs
 
Under the ADA, employers are generally prohibited from making disability-related inquiries or requiring medical examinations. However, there is an exception that permits employers to conduct “voluntary” medical examinations or obtain medical histories as part of a bona-fide employee health program, including wellness programs.
 
The EEOC’s prior guidance on the matter provided that a wellness program is “voluntary” if an employer neither requires participation nor penalizes employees who opt out. However, the EEOC’s earlier guidance was limited, and, most importantly, failed to address the extent to which incentives or penalties could affect the “voluntary” nature of a wellness program for purposes of ADA compliance.
 
The Proposed Rules
 
The proposed rules would apply only to employer-sponsored wellness programs that include disability-related inquiries or medical examinations. Other types of wellness programs, such as those limited to attendance at health education classes, would not be subject to the proposed rules.  
 
Promotion of Health or Prevention of Disease
 
Wellness programs must be reasonably designed to promote health or prevent disease, cannot be unduly burdensome to employees, and must not violate the ADA by discriminating against individuals with disabilities. Under the proposed rules, a wellness program would be “reasonably designed” where it collects information on a health risk assessment to provide feedback to employees regarding health risks or uses aggregate information from health risk assessments to design programs targeted at particular medical conditions. Conversely, a wellness program that collects health information without providing feedback to employees or fails to use the information for designing targeted health programs would violate the ADA.
 
Voluntary Standards
 
The proposed rules provide several requirements that must be satisfied for a program to meet the “voluntary” standard, and therefore comply with the ADA. Employees may not be required to participate in a wellness program, may not be denied health insurance or given reduced health benefits if they do not participate, and may not be disciplined for declining to participate. Not surprisingly, employers may not coerce, intimidate, or threaten employees as a way to encourage them to participate in wellness programs or achieve certain health outcomes.
 
Notice
 
Under the proposed rules, employers would have to provide employees with a notice describing the specific medical information that will be collected as part of the wellness program, who will receive the information, how it will be used, and the process for keeping employee medical information confidential. Accordingly, if the proposed rules become effective, employers will need to revise their wellness program communications to provide more detailed information regarding the use and confidentiality of employee medical information.
 
Incentives
 
Perhaps the most important aspect of the proposed rules is the proposed limitation on wellness program incentives or rewards. Employers would be able to offer only a limited incentive that cannot exceed 30 percent of the total cost of employee-only coverage for employees to participate or achieve certain health outcomes. As for smoking cessation programs, while HIPAA and the ACA permit rewards of up to 50 percent of the employee-only premium, the 30 percent limitation imposed by the proposed rules might cap the incentive for smoking cessation programs that require a medical examination or include medical-related inquiries. On the other hand, wellness programs that provide incentives based only on responses to questions about tobacco use would likely get the benefit of the 50 percent cap permitted under the ACA.
 
The incentive limitations imposed by the proposed rules do not perfectly align with those available under HIPAA and the ACA. Although the proposed 30 percent limitation on incentives is consistent with HIPAA and the ACA, it previously applied only in the context of health-contingent wellness programs, which require employees to achieve certain health results to obtain the reward. Participatory programs requiring employees merely to participate in an activity to achieve the reward were formerly excluded from the incentive cap. Thus, where employers could previously offer incentives for participatory wellness programs that would not be aggregated with the health-contingent program incentives in determining if the 30 percent limitation was exceeded, the landscape may change. If the proposed rules become effective, employers will need to be mindful of the incentive cap for both types of wellness programs.
 
Nondiscrimination & Accommodation
 
Finally, the proposed rules require employers to provide reasonable accommodations that enable employees with disabilities to participate and earn whatever incentives the employer offers. Employers also are not relieved from their obligations to comply with general nondiscrimination requirements – wellness programs must not discriminate against employees with disabilities or on the basis of any other classification prohibited by law.
 
What’s Next? 
           
Until the EEOC’s rules are final, employers are not required to comply with any of the proposed changes. The content of the final rule will likely be different than its current form. However, given the EEOC’s heightened scrutiny of wellness programs and litigation against employers whose wellness programs purportedly violate the ADA, employers should identify any areas of their wellness programs that diverge from the proposed rule and examine options for complying with the EEOC’s direction. The current version provides guidance on where the EEOC is heading, even though employers do not have to comply yet. Taking a look at incentives is a good starting place based on the impending 30 percent cap that would apply to both participatory and health-contingent wellness programs that include disability-related inquiries or medical examinations.
 
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