HDR thirdshift

Employee wellness programs—between a rock and a hard place

Employee wellness programs may be caught between the rock of the Americans With Disabilities Act (ADA) and hard place of the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA).

To resolve this quandary, the Equal Opportunity Employment Commissions (EEOC) has issued a proposed rule to resolve what appears to be a contradiction between the two laws. But even without the adoption of this proposed rule, employers need to be careful with how they implement wellness programs—especially with those that include rewards or “penalties.”

On the one hand, the ADA applies to wellness programs in two ways. Employers can’t—

  • Just ask for any ole medical information they want.
  • Discriminate against employees based on a disability (which they might discover, of course, if they could ask for the medical information).

On the other hand, the privacy provisions of HIPAA (as amended by ACA) say an employer can’t discriminate against participants in group health plans or health insurance policies based on a health factor EXCEPT when it is related to a wellness program—that is, programs that promote health or prevent disease. Under the regulations jointly issued pursuant to HIPAA by the U.S. Departments of Labor, Treasury, and Health and Human Services, two types of wellness programs are identified: participatory and health contingent.

The participatory wellness programs might include things like an employer paying for an employee’s—

  • Membership in a fitness center.
  • Smoking-cessation program.
  • Health risk assessment (HRA)—so long as it doesn’t require that the employee do anything about health issues identified by the HRA.

The health-contingent wellness programs provide a reward to an employee who participates in a program—

  • Without attaining a specific health outcome (so-called activity-only programs).
  • That requires a specific health outcome, such as not smoking or maintaining a certain weight range (so-called outcome-based programs).

Generally speaking, when we look at the HIPAA rules about wellness programs, there’s not much of a legal downside to the participatory programs, but the health-contingent programs are not legally kosher unless they meet five requirements:

  1. All eligible employees must be given the chance to qualify for the reward at least once a year.
  2. The reward can’t exceed 30% of total cost of employee-only coverage under the health plan.
  3. The programs must be reasonably designed to promote health or prevent disease.
  4. The full reward must be available to all similarly situated employees and must allow an alternative standard for receiving the award for employees who can’t reach a goal because of a medical condition.
  5. Employees must be informed of the alternative standard.

Of course, there’s a good bit more to it, but we’ve deliberately simplified our description of the requirements to give you the gist of why health-contingent wellness programs are difficult to implement.

Finally, the HIPAA rules about wellness programs do not determine whether a wellness program meets the requirements of the ADA, the Civil Rights Act of 1964 (Title VII), or the Genetic Information Nondiscrimination Act (GINA).

So that brings us back to the ADA’s requirements about wellness programs.

The ADA prohibits employers from making disability-related inquiries or requiring medical examinations— unless they are related to the job the employee performs. Nevertheless, employers may conduct voluntary medical examinations and take voluntary medical histories as part of a wellness program. Under its previous guidance, the EEOC considers a program voluntary so long as the employer neither requires participation nor penalizes employees who don’t participate. But the EEOC’s regulations don’t address whether an employer offering an incentive makes a wellness program involuntary.

In explaining the rationale for its proposed rule, the EEOC indicates that small rewards or penalties for participation in a wellness program are plausibly voluntary, but notes that participation may require employees to disclose medical information that they can’t be required to disclose as provided by the ADA. As the EEOC notes, disclosure of such information is expressly permitted by HIPAA, but made impermissible by the ADA.

So, the EEOC explains, its proposed rule incorporates an interpretation that promotes the ADA’s goal of limiting employer access to medical information and HIPAA’s goal of promoting wellness programs. The proposed rule allows incentives, but limits them so that economic coercion is prevented. The proposed rule—

  • Explains what an employee health program is.
  • Defines what makes it voluntary.
  • Indicates what incentives employers may offer as part of voluntary program.
  • Requires notices about confidentiality of information obtained through a voluntary program.

The incentive (which may be a reward or penalty) cannot exceed 30% of the total cost of employee-only coverage. Voluntary means that employers—

  1. Can’t require employees to participate.
  2. Can’t deny coverage under any of its group health plans for non-participation.
  3. Can’t coerce, intimidate, threaten, retaliate against, or otherwise take any adverse employment action against a non-participating employee.

The EEOC notes that as long as an incentive for a participatory wellness program is available to all similarly situated employees regardless of any health factor, it doesn’t violate either the ADA or HIPAA.

What does this mean for employers?

Even if the proposed rule is not adopted, employers still face a challenge of navigating between Scylla (ADA) and Charybdis (HIPAA). To the extent that the proposed rule may make that navigation a bit easier, it’s probably a good thing. The bottom line is, wellness programs must be carefully implemented.

More information about the proposed rule and commenting on the proposed rule.

The EEOC has invited the public to comment, as it must do as required by the Administrative Procedure Act. Your comments must be made on or before June 19, 2015.

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

© 2015

New FMLA forms published
EEOC decision orders Army to allow transgendered e...
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Sunday, 22 July 2018

Captcha Image