The Equal Employment Opportunity Commission (EEOC) estimates that almost 600,000 employers offer some type of employee wellness program, such as nutrition classes, smoking cessation programs and health risk assessments. EEOC has now Proposed New Rules defining the voluntary nature and permissible incentives of these programs.
The Americans with Disabilities Act (ADA) bans discrimination based on disability in regard to most facets of the employment relationship, including “fringe benefits available by virtue of employment, whether or not administered by the covered entity.” The ADA also restricts employers from obtaining employee medical information through disability-related inquiries or medical examinations.
An exception exists in the law for employee health programs, which the EEOC contends must be voluntary; penalties for employees who do not participate are forbidden. The EEOC’s new rules seek to clarify precisely what they mean by “voluntary”, especially in regard to incentives to encourage participation. These proposed rules apply to all programs that require the disclosure of disability-related health information.
The Proposed Rules provide:
- Purpose: employee health programs, including any disability-related inquiries and medical examinations that are part of such programs, must be reasonably designed to promote health or prevent disease.
- Incentives: Incentives for participation are limited to 30% of the total cost of employee-only coverage for both health-contingent wellness programs and participatory wellness programs.
- Voluntariness: A three part test where (1) employees are not required to participate; (2) coverage under any group health plans or particular benefits packages within a group health plan are not restricted or limited due to non-participation; and (3) there is no adverse employment action or retaliation against employees who choose not to participate.
- Notice: If the program is offered as part of, or provided by, a group health plan, an employer must provide a notice that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the covered entity will employ to prevent improper disclosure of the medical information.
- Disclosure: Medical information collected through an employee health program may only be provided to an employer in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of specific individuals, except as needed to administer the health plan.
Although public comment is still to come, these proposed rules are likely to become final. Therefore, now is the time to take a fresh look at your company policies.