What You Should Know About Employee Wellness Program Compliance
February 28, 2019
Corporate wellness programs are more popular than ever, gaining momentum in part due to the soaring cost of healthcare. However, deciphering a given wellness program’s compliance under the law is no simple task.
In 2016, the Equal Employment Opportunity Commission (EEOC) released regulations defining a “voluntary” wellness program. But the AARP successfully challenged these regulations and the recent demise of the EEOC’s incentive limitations put employers back in uncertain territory regarding wellness compliance.
On December 20, 2018, in response to the AARP decision, the EEOC revised its regulations to remove incentives that had been permitted. What remained is that a health program which includes disability-related inquiries or medical examinations (such as a health risk assessment or biometric screening) is voluntary as long as the program meets certain requirements:
- Employees may not be required to participate;
- The employer may not deny coverage or limit the extent of benefits under any of its group health plans or package options for employees who do not participate;
- The employer does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees; and
- The employer provides employees with a confidentiality notice that is understandable; explains the type of medical information that will be obtained and the specific purposes for which the medical information will be used; and describes the restrictions on the disclosure of the employee’s medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the HIPAA privacy and security regulations).
What remains unclear is whether offering an incentive to an employee to participate in a disability-related inquiry or medical examination as part of an otherwise compliant program would be viewed by the EEOC to be impermissible.
For any wellness program integrated with a health plan or constituting a health plan itself, employers need to assess whether the plan is “purely participatory” or “health contingent.” Health-contingent plans (which condition the award of incentives on accomplishing a health goal) require additional compliance considerations, including—but not limited to—incentive limitations, reasonable alternative standards (RAS) and notice requirements.
RAS are of particular importance. Often there is an “accidental” program such as a tobacco surcharge, and the employer does not even realize the wellness rules are implicated, or the employer’s RAS is another health-contingent parameter that actually necessitates another RAS. The Department of Labor is actively enforcing compliance in this area, so employers will want to be diligent.
Additionally, the EEOC’s American with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) regulations are still largely in force. The ADA’s own RAS and notice concepts continue to apply, along with confidentiality requirements. All that has changed is that the EEOC has declined to clarify at what point an incentive makes a program compulsory. Employers sponsoring wellness programs subject to the ADA have three choices, based on risk tolerance:
Run incentives for ADA plans up to the 30% cap that existed before. This is risky and an employer must rely on HIPAA’s similar incentive limitations as indicative of non-compulsory levels. If this path is chosen, it is imperative to document why this incentive preserves voluntariness for your participants.
Keep the incentives below the previous 30% cap, but incentivize the program. This approach also has risk because at what point an incentive takes choice away from participants is not defined. However, incentives are useful tools to motivate and reward health-conscientious behavior. Employers must carefully assess the overall structure of the program offered, consider the culture and demographics of the employees who may participate, and balance the desire to motivate against the need to decide on a reasonable incentive. Employers should document this analysis and reconsider it when a program changes.
Not incentivize the program at all. This is the most conservative route from a compliance perspective, but not required. Before the EEOC’s 2016 regulations, employers were incentivizing programs subject to the ADA, and nothing about the AARP case or the EEOC’s response to it prohibits incentives.
The compliance rules for employer-sponsored wellness programs will likely continue to be a moving target. With enforcement increasing, employers should review all wellness programs carefully (not just those tied to their group health plans) to see whether they are compliant with the ADA and GINA. It is critical for employers to carefully consider compliance, document the reasonableness of incentive choices, and seek advice from trusted counsel to avoid potentially costly and time-consuming issues.
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