EEOC’s Proposed Regulations Would Significantly Change Wellness Incentives Under ADA and GINA

The EEOC has announced proposed regulations that would significantly change the wellness program incentives permitted under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). As background, in 2016, the EEOC issued regulations allowing limited incentives (1) under the ADA for voluntary participation in wellness programs involving disability-related inquiries or medical examinations, and (2) under GINA for an employee’s spouse who voluntarily provides information in a health risk assessment about the spouse’s manifestation of a disease or disorder (see our Checkpoint article). In 2017, a federal court determined that the EEOC failed to show that the permitted incentives (generally 30% of the total cost of self-only coverage) were a reasonable interpretation of the laws’ voluntariness requirements. The court initially sent the regulations back to the EEOC for reconsideration, asking it to issue new rules addressing the court’s concerns (see our Checkpoint article). But after the EEOC indicated that amended rules would not be applicable until 2021, the court vacated the incentive provisions as of January 1, 2019, and the EEOC removed the vacated provisions (see our Checkpoint article).

The proposed regulations would address issues raised by the court, including inconsistencies between the incentive provisions of the vacated regulations and the HIPAA nondiscrimination rules and the failure to consider whether a 30% incentive level would result in some employees feeling coerced to participate in wellness programs. Both proposals permit de minimis incentives, but the ADA would, in certain circumstances, allow more. (Rather than define de minimis, the proposals give examples: a water bottle or gift card of modest value would be de minimis; paying for a gym membership would not be.). Here are highlights:

• ADA. Incentives for wellness programs that include a medical examination or disability-based inquiry generally would be limited to de minimis amounts. Under a new interpretation of the ADA’s safe harbor provision, however, higher incentives would be permitted for health-contingent programs that are part of, or qualify as, a group health plan. Key provisions include—

  • Voluntariness. To ensure participation is voluntary, employers would not be permitted to require employees to participate; deny non-participating employees access to health coverage or particular benefit packages under their group health plans; limit non-participating employees’ health plan coverage; or take any other adverse action against employees who choose not to answer disability-related inquiries or undergo medical examinations.
  • Health-Contingent Programs. Health-contingent programs are defined by reference to the HIPAA nondiscrimination regulations. They require participants to satisfy a standard related to a health factor to earn an incentive and may be activity-only (such as walking, dieting, or exercise programs) or outcome-based (such as programs measuring cholesterol or blood pressure that provide rewards for individuals who meet certain targets)(see our Checkpoint article). (By contrast, participatory programs—such as completion of a health risk assessment—do not require participants to satisfy a standard related to a health factor to receive the reward.) Health-contingent programs must satisfy all five HIPAA nondiscrimination criteria to provide higher than de minimis incentives.
  • Health Plan Requirement. Factors relevant to determining whether a health-contingent program is part of, or qualifies as, a group health plan include whether the wellness program: (1) is offered only to group health plan participants; (2) provides incentives tied to a participant’s costs under the group health plan; (3) is offered by a vendor that has contracted with the plan or the plan’s insurer; and (4) is included in the plan’s terms of coverage.
  • Maximum Incentive. Health-contingent programs that are part of or qualify as a group health plan could provide an incentive up to the amount permitted under the HIPAA nondiscrimination regulations. Generally, this amount is 30% of the total cost (employer and employee contributions) of the coverage in which the employee enrolled. Family members’ eligibility for wellness incentives is also taken into account in determining cost. The percentage increases to 50% to the extent the wellness program is designed to prevent or reduce tobacco use.
• GINA. Under the proposal, employers would only be permitted to offer a de minimis incentive to an employee whose family member (not just a spouse, as in the vacated provisions) provides information to a wellness program about a disease or disorder manifested by the family member. As under the existing GINA regulations, employers could offer higher incentives for completion of health risk assessments that include questions about family medical history or other genetic information, so long as the questions soliciting this information are clearly identified and the incentive is equally available to individuals who do not answer them. Genetic information (including family medical history) may be used, and additional incentives may be offered, to encourage participation in disease management and other health improvement programs that are also available to other individuals with diagnosed health conditions or lifestyles that put them at increased risk of developing a medical condition. However, incentives still could not be offered in exchange for an agreement permitting sale or other transfer of the information, and retaliation against non-participating employees or family members would still be prohibited.

EBIA Comment: Employers and health plan sponsors frequently express frustration at the inconsistent legal requirements imposed by the numerous laws and regulations that may apply to wellness programs. Unfortunately, the proposals do not appear to solve that problem, diverging even farther than the vacated provisions from the HIPAA nondiscrimination rules. (For example, these regulations would conform the incentive calculations under the ADA and HIPAA for many health-contingent wellness programs, but the ADA’s de minimis incentive limits for participatory programs would be much more restrictive than HIPAA.) Those working with wellness programs may wish to accept the EEOC’s invitation for public comments, which must be received no later than 60 days after the proposed rules are published in the Federal Register. Given the expected volume of public comments and the impending change in presidential administrations, the proposals may undergo substantial revisions before they are finalized. For more information, see EBIA’s Consumer-Driven Health Care manual at Sections VI.G (“Wellness and Disease-Management Programs: GINA Considerations”) and VI.H (“Wellness and Disease-Management Programs: ADA Considerations), EBIA’s Group Health Plan Mandates manual at Sections XX.F (“ADA Considerations for Wellness Programs”) and XXII.E (“GINA and Wellness Programs”), and EBIA’s HIPAA Portability, Privacy & Security manual at Sections XI.H (“No Discrimination on the Basis of Genetic Information”) and XI.I (“Wellness Programs Must Meet Specific Nondiscrimination Requirements”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.3 (“Nondiscrimination Rules’ Interaction With Wellness Programs”) and EBIA’s Health Care Reform manual at Section XIII.C (“Health Status Nondiscrimination and Wellness Programs”).

Contributing Editors: EBIA Staff.