On April 18, 2015, the Equal Employment Opportunity Commission (EEOC) issued a proposed rule on the treatment of employer wellness programs under the Americans with Disabilities Act (ADA). The proposed rule amends the ADA regulations and interpretive guidance to address the use of incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations. While the rule provides a degree of certainty in the design and administration of wellness programs, questions remain about the impact the EEOC's guidance will have on the future development of wellness programs.
The ACA, HIPAA, ADA and GINA: A Myriad of Laws Impact Wellness Programs
Employers have increasingly turned to wellness programs to reduce their healthcare costs and improve the health and productivity of their workforce. Many companies offer "participation-only" wellness programs, whereby employees attend periodic wellness seminars or complete health risk assessment questionnaires to obtain a reward from the employer, usually a discount on the cost of health insurance. Some employers also offer "outcome-based" wellness programs, which condition the reward on the employee meeting a certain health-related benchmark, such as an appropriate body mass index (BMI) or blood cholesterol level, or remaining tobacco-free. Biometric screenings are a common part of these wellness and health promotion programs.
The use of financial incentives has been a cornerstone of many wellness programs. Recognizing the benefit and popularity of such programs, the Affordable Care Act (ACA) included provisions to promote their use by codifying and building upon regulations under the Health Insurance Portability and Protection Act (HIPAA). For a wellness program conditioning a financial incentive on the participant meeting a standard related to a health factor, the 2006 HIPAA rule specified that the value of the wellness plan incentive could not exceed 20% of the cost of coverage. The ACA endorsed the use of financial incentives for health factor-based wellness programs, and increased the incentive limit from 20% to 30% of the cost of coverage, and gave the Secretary of Health and Human Services the discretion to increase the threshold to up to 50%. The ACA regulations, issued in 2013, authorized a 50% cap for tobacco cessation programs. These limits set forth in the ACA and HIPAA apply only to health-contingent wellness programs in a health plan. The ACA and HIPAA limits on financial incentives do not apply to participatory wellness programs, which do not include any conditions for obtaining a reward based on an individual satisfying a standard related to a health factor.1
Although permissible under the ACA and HIPAA, the use of incentives to encourage participation in wellness programs had come under attack recently by the EEOC as violating the ADA and the Genetic Information Nondiscrimination Act (GINA). GINA generally prohibits employers from collecting genetic information, including family medical history, from employees. A limited exception exists for "voluntary" wellness programs, so long as certain requirements are met. The EEOC final regulations implementing Title II of GINA prohibits employers from offering employees financial incentives to provide genetic information. The EEOC General Counsel filed several lawsuits against employers in 2014 alleging that their wellness programs violated the ADA and GINA. In EEOC v. Honeywell International Inc.,2 the EEOC tried to enjoin the employer from implementing its wellness program, claiming it violated both the ADA and GINA by penalizing employees for not participating in biometric screenings. The federal district court rejected the EEOC's request, noting that "great uncertainty persists in regard to how the ACA, ADA and other federal statutes, such as [GINA] are intended to interact." This uncertainty has left employers in legal limbo.
The uncertainty and debate centers on the definition of "voluntariness" allowed under the ADA, and whether and the degree to which a financial inducement will render a wellness program involuntary. The ADA allows employers to "conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that work site." In its Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the Americans with Disabilities Act issued in 2000, the EEOC stated that a wellness program is voluntary if it neither requires nor penalizes employees who participate. In a 2009 letter released during the last days of the Bush Administration, the EEOC's Office of Legal Counsel endorsed the HIPAA rule and announced that a wellness plan would be "voluntary" if the inducement to participate did not exceed 20% of the cost of coverage, consistent with the HIPAA's regulations in effect at the time. In March 2009, the EEOC rescinded this statement and announced it would continue to examine the issue.
In the lawsuits filed by EEOC General Counsel David Lopez taking aim at wellness programs, Lopez seemed to interpret the ADA as precluding incentive-based wellness programs, despite the ADA exception for voluntary medical examinations that are part of an employee health program. Such lawsuits also disregard the statute's safe harbor provision that allows a covered organization to establish, sponsor, observe, or administer the terms of a "bona fide benefit plan" that is not a "subterfuge" for avoiding the purposes of the ADA, and which meet certain additional requirements. In a 2012 decision, in the absence of additional guidance, the U.S. Court of Appeals for the Eleventh Circuit addressed the treatment on wellness programs under the ADA. In Seff v. Broward County,3 the court held that an employer that imposed a surcharge on employees who did not participate in the wellness program did not violate the ADA because the program fell...
