Husch Blackwell was recently named a finalist for the St. Louis Business Journal’s Healthiest Employers 2016 competition. The Business Journal’s profile of Husch Blackwell highlights the firm’s effective use of wellness challenges in the workplace and praises Chris Smith, a partner in our St. Louis office, for his dedicated participation in the wellness initiatives.
Given our firm’s success with health and wellness initiatives, we decided to take this opportunity to discuss and reflect on just a few (of the many) legal requirements relevant to employer wellness programs.
Generally, wellness programs are employer-sponsored initiatives that are designed to improve the health or well-being of the organization’s employees. Proponents of wellness programs tout the benefits of increased productivity, improved morale, and savings on healthcare costs. Example programs include gym membership reimbursements, smoking cessation programs, or health insurance discounts. Many programs involve the acquisition of employees’ medical information, often through health risk assessments (HRAs) or biometric screenings.
A wide variety of laws govern an employer’s implementation of wellness programs, some more directly than others. Relevant statutes include:
- Health Insurance Portability and Accountability Act of 1996 (HIPAA);
- Affordable Care Act (ACA);
- Americans with Disabilities Act (ADA);
- Genetic Information Nondiscrimination Act (GINA);
- Title VII of the Civil Rights Act of 1964 (Title VII); and
- Age Discrimination in Employment Act (ADEA).
Wellness Program Regulation
The remainder of this post highlights some of the latest developments in wellness program regulation brought about by the Equal Employment Opportunity Commission’s recent publication of final rules addressing the treatment of wellness programs under both Title I of the ADA and Title II of GINA. The final regulations provide valuable guidance to employers to ensure compliance with the ADA and GINA. The new requirements apply prospectively on or after Jan. 1, 2017, depending on the effective date of the benefit plan at issue. Clarifications of previously-existing requirements (e.g., confidentiality requirements) are already in effect.
ADA Final Rules
In general, the ADA prohibits employer-mandated disability-related medical exams and disability-related inquiries, unless job-related and consistent with business necessity. However, such exams and inquiries are permitted as part of wellness programs if certain conditions are met. Although some courts have exempted wellness programs from the ADA under the law’s “safe harbor” provision relating to insurance, the final rule reaffirms the EEOC’s position that this safe harbor does not apply to wellness programs.
The EEOC’s final rule requires that wellness programs be “reasonably designed” to promote health or prevent disease. For instance, employers should not test or screen employees without providing feedback or addressing the conditions identified. Similarly, employers should not use information obtained through a wellness program only to estimate future healthcare costs. Additionally, employers may not require an overly burdensome amount of time for participation, unreasonably intrusive procedures, or significant cost to the employees.
The final rule makes clear that an employee’s participation in a wellness program must be voluntary. Employers may neither require participation nor retaliate against non-participants (e.g., denying health insurance coverage or limiting benefits). For participation to be voluntary, employers must also follow certain EEOC notice requirements.
The EEOC limits the extent to which employers may incentivize employee participation in a wellness program. The idea here is that if participants are offered high-value rewards, participation (at some point) will no longer be “voluntary” because employees will have no choice but to take advantage of the deal. Under the final rule, an incentive (whether a reward or surcharge) may not exceed 30 percent of the cost of self-only coverage under a particular health plan (the rule outlines how to determine which specific health plan to use for purposes of this analysis). For certain tobacco-related wellness programs, a 50 percent rule applies. If an employer offers “in-kind” incentives, such as baseball or concert tickets, the employer may determine the dollar value of these incentives as long as they use a reasonable method. Importantly, these incentive limits only apply to employees. Thus, the ADA does not limit the value of incentives that a company may offer to its employees’ spouses or dependents for their participation in the program.
Information collected through a wellness program may only be provided to the employer in aggregate form, except when other forms of disclosure are necessary to administer the program. Generally, employers can satisfy this requirement by complying with HIPAA’s privacy rules. Employees may not waive these confidentiality protections as a condition for participation or for receiving an incentive for participating, except to the extent permitted to carry out specific activities related to the program.
GINA Final Rules
Generally, GINA prohibits employers from requesting, requiring, or purchasing genetic information from employees and/or their family members. One exception to this rule allows employers to ask medical history questions as part of wellness programs if:
(1) the program provides health or genetic services;
(2) the employee provides voluntary, knowing, and written authorization; and
(3) the employer satisfies confidentiality requirements.
The voluntariness requirement is very strict – employers may not offer any incentives to an employee for that employee’s genetic information. Importantly, an employee’s “genetic information” is defined to include their family medical history, which includes information about the past or current health status of the employee’s spouse. In other words, obtaining certain information about an employee’s spouse means you have obtained the employee’s genetic information, possibly in violation of GINA.
Incentives for Spousal Information
Although companies may not offer employees an incentive to provide their genetic information, the EEOC’s final rule allows employers to offer incentives to an employee’s spouse for information about their past or current health status (which, as noted above, is considered the employee’s genetic information). However, the final rule does not also allow employers to offer the spouse incentives to provide their own genetic information. Accordingly, an employer may offer the spouse incentives to provide part of the employee’s family medical history, but may not incentivize the spouse to provide their own family medical history.
As with the ADA, the EEOC has now set limits on incentives permitted by GINA. The rules for GINA limits are the same as those for the ADA – 30 percent of the relevant self-only coverage. Note that both the employee and the spouse may each receive their own reward up to 30 percent. But again, employers may not offer incentives to employees for the employee’s genetic information. Thus, employers must make it clear to employees that they will be entitled to the reward upon completion of the program, regardless of whether the employee agrees to provide their family medical history.
Employees’ spouses that participate in the company’s wellness programs must provide their own written authorization, separate from that of the employee.
In the final rule, the EEOC makes clear that like the ADA, GINA also requires wellness programs to be reasonably designed. To comply with this requirement, employers should apply the same “reasonableness” principles relevant to the ADA.
Employers are prohibited from denying access to health insurance or any package of benefits to, or retaliating against, any employee whose spouse refuses to provide current or past health status information to the wellness program.
Recommendations Going Forward
The EEOC is making a concerted effort to crack down on what it deems to be harmful and unlawful wellness programs. Employers should be vigilant in ensuring compliance with all relevant laws to avoid fines or lengthy and costly litigation. Accordingly, we recommend that companies review their wellness programs for areas of non-compliance with the rules discussed above. The following is a non-exhaustive list of tips and considerations:
- Do not require employee participation;
- Do not punish non-participants because of their non-participation (and beware of the bad optics of discharging or disciplining non-participants, depending on the circumstances);
- Accommodate the needs of employees with disabilities so they may participate in your wellness programs;
- If you collect health information as part of your program, provide feedback to participants or use the information to address prevalent health conditions in your workforce;
- Frame your incentive as a reward, not a penalty;
- Set the value of your incentive at a reasonable amount;
- Train your HR staff on responding appropriately to complaints about the wellness program.
Although following these best practices will not guarantee that your employees will not complain or file a charge with the EEOC, making these proactive efforts will reduce the likelihood of wellness program-related headaches.