The EEOC’s Proposed New Wellness Program Rules Have Made an Appearance

On January 7, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) forwarded to the Federal Register its Notices of Proposed Rulemakings (NPRMs) on wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  The proposed rules have been whispered about for months and, if adopted, will replace the previous set of wellness program rules vacated, in large part, by a federal district court in 2017.  The EEOC’s announcement of the new proposed rules and links to the unofficial versions of the NPRMs (one for the ADA and one for GINA) may be found here.  This post addresses only the ADA, but the GINA rules are similar and build on the same concepts.

Background:  Workplace wellness programs are programs implemented by employers that are designed to improve employee (and dependent) health and wellness.  Wellness programs typically consist of a menu of employer-provided or employer-sponsored services designed to promote employee (and dependent) health and wellness, including weight loss, an on-site exercise facility, smoking cessation programs, biometric screening, flu shots or vaccines, and EAPs.  These services may be offered (i) with or without a reward or incentive attached, and (ii) as part of or separate from a group health plan.  The most common type of reward or incentive offered is a reduction in an employee’s health care premium for choosing to participate in a wellness program or meeting certain program goals.  The Health Insurance Portability and Accountability Act of 1996 (HIPAA) has extensive regulations that govern the establishment of wellness programs that are associated with or constitute group health plans.

So here is the issue — employer-sponsored wellness programs, whether associated with a group health plan or not, typically ask employees to voluntarily answer disability-related inquiries or undergo certain medical examinations.  Indeed, that is the nature of the program.  However, disability-related inquiries and medical exams are tightly regulated by the ADA and GINA.  In order not to run afoul of either of these statutes, it is critical that a voluntary wellness program actually be voluntary in all respects.  This is where the EEOC enters the picture with regulations and guidance on what it means for a wellness program to be voluntary and what incentives may go too far in coercing employees to participate in these programs.

Originally, in 2016, the EEOC adopted the standard contained in HIPAA and reasoned that employers may offer incentives up to 30% of the total cost of health insurance (or 50% in the case of tobacco cessation) to encourage participation in certain types of wellness programs without undermining the voluntary nature of those programs.  Shortly after adoption of the HIPAA standard, the EEOC was sued on the grounds that the 30% maximum incentive was too high and employees may feel coerced into answering medical questions and submitting to medical exams.  In 2017, a federal court agreed.  Employer-sponsored, voluntary wellness programs have been in limbo ever since.

The New Proposed Rules:  Under the new (ADA) proposed rules, if the wellness program is part of a group health plan (based on a four factor test), then it will be deemed to be voluntary for purposes of the ADA so long as the program is in compliance with all of the HIPAA rules.  These rules include the 30% limitation on premium incentives and rewards.

If the wellness program is not part of a group health plan, the employer may only offer a reward or incentive that is de minimis in nature without violating the ADA.  Examples, according to the EEOC’s proposed rules, of a de minimis award include things like a water bottle or gift card of modest value.  On the other hand, incentives such as paid annual gym memberships, free airline ticks, or annual surcharges of $600 for failing to participate in the wellness program would not be considered de minimis.  This is a major change.

The Bottom Line for Employers:  The proposed new rules are not unexpected, but they represent a major departure from the previous regime for evaluating voluntary wellness programs under the ADA.  Employers who are sponsoring or considering sponsoring voluntary wellness programs that ask employees to undergo medical examinations or ask employees voluntarily to respond to disability-related inquiries in exchange for a reward or incentive, will want to review the structure of those programs to ensure that they not only comply with HIPAA if applicable, but also that they are truly voluntary in order to avoid implicating the ADA (or GINA).  If they are not voluntary, the employer will then have to ensure that they comply fully with the ADA’s and GINA’s restrictions on when and what disability-related inquiries or medical exams an employer may ask or require an employee to undergo.