May 31, 2016
On May 16, 2016, the Equal Employment Opportunity Commission (EEOC) released final regulations applying the requirements of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) to employer "wellness" programs. The regulations, which largely mirror proposed regulations issued in 2015, are effective for plan years beginning on or after January 1, 2017. With open enrollment for 2017 only a few months away, employers need to ensure that their wellness programs comply with the new rules and that their employee communications are consistent with these rules.
A wellness program generally includes any health promotion and disease prevention program offered to employees either as part of a group health plan or as a separate employee benefit. Common examples include "health risk assessments" and biometric screenings for health risk factors, such as high blood pressure or cholesterol. Wellness programs also can include benefits such as nutrition classes, weight loss programs, smoking cessation programs, and onsite exercise facilities.
The ADA generally prohibits employers from discriminating against employees on the basis of disability. It also generally restricts employers from obtaining medical information from employees except in certain circumstances. One exception is data collection as part of a "voluntary" employee health program, such as many wellness programs. In addition, the ADA requires that wellness programs must be made available to all employees, that the employer provide reasonable accommodations to employees with disabilities, and that the employer keep all medical information confidential. The reasonable accommodation standard is intended to "enable employees with disabilities to earn whatever financial incentive an employer" offers to non-disabled employees under its wellness program.
GINA prohibits discrimination in employment on the basis of genetic information. Among other things, it prohibits employers from using genetic information in making decisions about employment and restricts employers from requesting, requiring, or purchasing genetic information.
The Health Insurance Portability and Accountability Act, as amended by the Patient Protection and Affordable Care Act, also includes rules governing wellness programs. Final regulations were issued in 2013, and the new EEOC and GINA regulations generally are consistent with those rules.
A key requirement under the final regulations is that a wellness program must be "reasonably designed to promote health or prevent disease." In order to meet this standard, the program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a subterfuge for violating the ADA, GINA or other laws prohibiting employment discrimination, or require employees to incur significant costs for medical examinations. Examples of programs that are reasonably designed to promote health or prevent disease include biometric screening or other procedures to alert employees to health risks. However, a program that provides no feedback to employees or is used merely to shift costs from employers to employees would not so qualify.
The final regulations permit employers to inquire regarding disabilities and genetic information-related matters in connection with "voluntary" wellness programs. A wellness program is considered voluntary only if the employer:
A voluntary wellness program may offer "incentives" to employees to participate. In general, the incentive is limited to 30 percent of the total cost of self-only coverage under the health plan, with similar rules applicable to programs not tied to the employer’s health plan. For example, a wellness program could reduce employees’ out-of-pocket health plan costs if the employee undergoes a biometric health screening or attends nutrition classes.
There are special rules for smoking cessation programs. If the program requires testing of employees in order to receive the incentive, the 30 percent limit applies. However, if it permits employees to self-certify, the incentive can be up to 50 percent of the cost of self-only coverage.
ADA rules already in effect generally prohibit disclosure of an employee’s medical information, and the final wellness program regulations make clear these rules apply to wellness programs. In addition, the regulations add two other conditions, providing that the employer:
There are few surprises in the final rules, since they closely mirror the 2015 proposed regulations and are consistent with EEOC enforcement actions in the past several years. However, employers should carefully review their wellness programs to determine whether any changes are needed. They also should ensure that required confidentiality protections are in place and that employee communications during open enrollment later this year for the 2017 plan year satisfy all applicable requirements.
Gibson, Dunn & Crutcher’s lawyers are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Labor and Employment or Executive Compensation and Employee Benefits practice groups, or the authors:
Please also feel free to contact any of the following practice leaders and members:
Labor and Employment Group:
Catherine A. Conway – Los Angeles (213-229-7822, email@example.com)
Eugene Scalia – Washington, D.C. (202-955-8206, firstname.lastname@example.org)
Jason C. Schwartz – Washington, D.C. (202-955-8242, email@example.com)
Executive Compensation and Employee Benefits Group:
Michael J. Collins – Washington, D.C. (202-887-3551, firstname.lastname@example.org)
Stephen W. Fackler – Palo Alto/New York (650-849-5385/212-351-2392, email@example.com)
Sean C. Feller – Los Angeles (310-551-8746, firstname.lastname@example.org)
© 2016 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.