Regulations Under the Americans With Disabilities Act, 29 CFR Part 1630, 81 Fed. Reg. 31125 (May 17, 2016); Final Rule: Genetic Information Nondiscrimination Act, 29 CFR Part 1635, 81 Fed. Reg. 31143 (May 17, 2016)
The EEOC has issued final regulations addressing the impact of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) on employer-sponsored wellness programs. The ADA regulations provide guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries or undergo medical examinations. The GINA regulations address the extent to which an employer may offer an inducement to an employee for the employee’s spouse to provide health information as part of a health risk assessment.
Although the final regulations largely mirror the 2015 proposed regulations (see our Checkpoint articles on the proposed ADA regulations and the proposed GINA regulations), there are some notable changes and clarifications. Here are highlights:
Maximum Incentive. The final ADA regulations clarify how to calculate the 30% limit on incentives that may be offered to employees for answering disability-related questions or undergoing medical examinations as part of a wellness program. Four situations are addressed: (1) where the employer requires employees to be enrolled in a particular health plan in order to participate in the wellness program, the limit is 30% of the total cost of self-only coverage under that plan; (2) if the employer offers a single health plan but employees do not have to be enrolled in the plan to participate in the wellness program, the limit is 30% of the cost of self-only coverage under the employer’s plan; (3) where the employer offers more than one health plan but does not require enrollment in a particular plan as a condition of participating in the wellness program, the limit is 30% of the employer’s lowest-cost self-only major medical coverage; and (4) if the employer does not offer a health plan, the limit is 30% of the total cost to a 40-year-old non-smoker purchasing self-only coverage under the second-lowest-cost plan at the “silver” coverage level on the Exchange in the location of the employer’s principal place of business. The GINA rules apply the same standards to spouses for providing information about current or past health status. [EBIA Comment: Varying the incentive limit based on whether the employee is enrolled in the employer’s health plan is a change from the proposed rule, which applied the 30% limit only to wellness programs offered through group health plans. The ADA and GINA limits are now identical because the proposed GINA limit—which was based on the total cost of the plan in which the employee and any dependents are enrolled and then apportioned between the employee and spouse—was overly complicated, and the EEOC saw no reason to adopt a different threshold for spouses.]
Notice Requirements. The ADA regulations confirm that, for all programs that ask employees to respond to disability-related inquiries or undergo medical examinations (whether or not offered through a group health plan), an employer must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure. The EEOC will provide a sample notice on its website that satisfies the necessary requirements. Declining to include a requirement that employees must provide prior, written, and knowing authorization, the EEOC addressed concerns for participants who unwittingly waive their privacy rights in the ADA regulations’ confidentiality rules. The final GINA rules add no new notice or authorization requirements. [EBIA Comment: The EEOC makes clear that if current notifications provided under other laws (such as HIPAA) do not include the required level of detail, employers must revise existing notifications or develop a new notice that complies with the final regulations. While the rule leaves open the possibility of using existing notifications if they include the required information, a model notice will be welcome.]
Confidentiality Requirements. The final ADA regulations adopt the confidentiality provisions of the proposed regulations, and add two new requirements. First, the employer may only receive medical information or history collected by a wellness program in aggregate form that does not disclose the identity of specific individuals except as is necessary to administer a health plan. Second, an employer may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information (except to the extent permitted to carry out specific activities related to the wellness program), or to waive confidentiality protections under the ADA as a condition for participating in a wellness program or receiving an incentive. The final GINA regulations include similar restrictions. [EBIA Comment: Employers should keep in mind that individually identifiable health information created or received by a wellness program that is part of a group health plan is likely to be protected health information (PHI) subject to HIPAA’s strict limitations on disclosures to plan sponsors.]
Bona Fide Benefit Plan Safe Harbor. The final ADA regulations pointedly affirm the EEOC’s position that the bona fide benefit plan safe harbor relied on by courts in Seff v. Broward County (see our Checkpoint article) and EEOC v. Flambeau, Inc. (see our Checkpoint article) does not apply to an employer’s decision to offer rewards or impose penalties in connection with wellness programs that include disability-related inquiries or medical examinations—even if the programs are part of the employer’s health plan. A Q&A explains that the ADA safe harbor was intended to allow insurers and plan sponsors to use information about risks posed by certain health conditions to make decisions about insurability and the cost of insurance and notes that many insurance practices (such as preexisting condition exclusions) that were permissible when the ADA was enacted are now unlawful under health care reform. The preamble to the final regulations states that Seff and Flambeau applied the safe harbor far too expansively in connection with wellness programs. [EBIA Comment: The EEOC has appealed the Flambeau decision to the Seventh Circuit, and the case may ultimately be decided by the Supreme Court. In the meantime, employers that continue to rely on the safe harbor as a means of avoiding the ADA’s “voluntary” requirement should be mindful of the EEOC’s opposition.]
EBIA Comment: Employers will need to digest these rules quickly. The ADA notice requirements and the ADA and GINA restrictions on incentives apply prospectively as of the first day of the first plan year beginning on or after January 1, 2017. (Other provisions, which clarify existing obligations, apply both before and after publication of the final regulations.) EBIA’s resources are currently being updated to reflect the new guidance. In the meantime, for more information, see 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 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). See also EBIA’s HIPAA Portability, Privacy & Security manual at Sections XI.H (“No Discrimination on the Basis of Genetic Information”), XI.I (“Wellness Programs Must Meet Specific Nondiscrimination Requirements”), and XXIII.C (“Sharing PHI and Electronic PHI With Plan Sponsors”). You may also be interested in our recorded webinar “Wellness Program Design and Administration.”
Contributing Editors: EBIA Staff.