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5-5-2015 The EEOC Issues Proposed Rule on the Application of the ADA to Wellness Programs

The EEOC Issues Proposed Rule on the Application of the ADA to Wellness Programs

On April 16, 2015, the Equal Employment Opportunity Commission ("EEOC") issued a proposed rule on the application of the Americans with Disabilities Act ("ADA") to employer-sponsored wellness programs. This much anticipated rule provides guidance to employers regarding whether the use of wellness programs as part of their health insurance plans complies with the ADA's provisions preventing employment discrimination on the basis of a disability.

Background

The use of wellness programs in conjunction with employer-sponsored group health insurance is encouraged by the Health Insurance Portability and Accountability Act ("HIPAA") as amended by the Affordable Care Act ("ACA"). Many employers have chosen to implement wellness programs as part of their group health insurance programs in hopes of improving the overall health of their employees and reducing the costs of health insurance. Frequently, employer-sponsored wellness programs include health risk assessments, such as biometric screenings, or exercise plans, such as walking programs.

HIPAA allows employers to offer financial incentives to employees participating in employer-sponsored wellness programs. However, many wellness programs include health questionnaires or medical examinations requiring the disclosure of information related to employees' disabilities. Thus, questions have been raised regarding the applicability of the ADA, which prevents employers from discriminating in the terms or conditions of employment on the basis of an employee's disability, to such programs. Also, while the ADA allows employees to participate in voluntary medical examinations and inquiries, there has been some uncertainty regarding whether wellness programs offering incentives for participation are truly voluntary. Further, employers have raised concerns regarding the applicability of the ADA's requirement that employers provide reasonable accommodations for employees with disabilities to wellness programs.

Proposed Rule

The EEOC's proposed rule seeks to provide guidance on the above-mentioned areas of uncertainty. Under the proposed rule, employers may continue to utilize wellness programs as long as the program is "reasonably designed to promote health or prevent disease." The wellness program may not be overly burdensome, highly suspect in the method chosen to promote health or prevent disease, or a subterfuge for violating the ADA. Further, as mentioned above, the wellness program must be voluntary. The proposed rule states that wellness programs will be considered voluntary as long as the employer does not require employees to participate in the program and does not deny health insurance coverage under its group health plan or other benefit if the employee chooses not to participate. Employers are also prohibited from taking adverse employment actions against employees who chose not to participate in the wellness program, retaliating against those employees, or threatening, coercing, or intimidating employees into participating in the wellness program.

Under the proposed rules, employers with wellness programs must provide notice to employees specifying the type of medical information that will be obtained through the wellness program. The notice must also state the specific purposes for which that medical information will be used, the restrictions on the disclosures of medical information, the parties who will have access to the information, and the methods the employer will utilize to prevent the improper disclosure of the medical information.

The EEOC's proposed rule specifically permits employers to offer incentives to employees who participate in wellness programs with limits. These limitations apply to all types of wellness programs which involve disability-related inquiries or examinations. The maximum allowable incentive for participation in such programs is limited to 30% of the total cost of employee-only health insurance coverage. Employers with smoking cessation wellness programs may offer an incentive of up to 50% of the cost of employee-only health insurance as long as the program does not include disability-related inquiries or examinations. Smoking cessation programs, however, must comply with the 30% of the cost of employee-only coverage incentive limitation if the program requires the disclosure of disability-related information.

All employers offering wellness programs must provide reasonable accommodations to employees with disabilities to allow those employees to participate and earn any incentives offered. Reasonable accommodations include such things as providing written materials for wellness classes in large print for visually impaired employees or allowing employees with disabilities making blood draws unsafe to undergo alternative tests as part of a medical examination. Employers should provide notice of the availability of reasonable alternatives or accommodations to all participating employees.

Health information obtained through such wellness programs may only be disclosed to employers in the aggregate. The information may not identify individual employees. Also, all health information obtained through wellness programs must be kept confidential, consistent with the HIPAA Privacy Rule.

Notably the proposed rule specifically states that compliance with its provisions does not guarantee that an employer-sponsored wellness program complies with other laws prohibiting discrimination in the terms and conditions of employment. Thus, questions remain regarding the application of Title VII and the Age Discrimination in Employment Act ("ADEA") to employer-sponsored wellness programs.

Action Items

The EEOC's proposed rule is not yet final. The Commission is accepting comments on the proposed rule until June 9, 2015. However, it is likely that the final rule will be very similar to the proposed rule. Therefore, employers should begin reviewing their wellness programs now to assure future compliance. Specifically, employers should ensure that their wellness program do not deny or limit health insurance coverage for employees who choose not to participate in the program. Employers should also determine whether the incentives offered to employees participating in wellness programs comply with the proposed rule's limitations. Employers should take steps to ensure that their wellness programs keep all employee health information confidential and do not allow unauthorized disclosures of such information.

Fraser Stryker is a leader in labor and employment law. Attorneys in the Firm's Labor and Employment Law Practice Group advise employers on current legal issues as well as provide proactive solutions to avoid legal issues which may arise in the future. For more information on the EEOC's proposed rule regarding the application of the ADA to employer-sponsored wellness programs, please contact an attorney in the Labor and Employment Law Practice Group, Pat Barrett, Kate Dittrick, Sarah (Sally) McGill, or Rhianna Kittrell.

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