Employers and plan sponsors that maintain wellness programs need to carefully review those programs to ensure compliance with various employment and benefit laws, including recently released guidance under the Patient Protection and Affordable Care Act (“PPACA”) and Title I of Americans with Disabilities Act (“ADA”). Nondiscrimination compliance issues surrounding employer wellness programs have been a hot topic since the issuance of the final regulations related to the prohibition against discrimination based on health status pursuant to the PPACA in 2013. However, over the last year, compliance concerns for these types of wellness programs have also arisen under the ADA as the United States Equal Employment Opportunity Commission (“EEOC”) filed several laws suits alleging violations of certain anti-discrimination rules. On April 16, 2015, the government issued much anticipated new guidance related to certain wellness programs under both the PPACA and the ADA.
Under the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the PPACA, group health plans and health insurance issuers are generally prohibited from discriminating against participants as to eligibility, benefits, or premiums based on a health factor. However, an exception to this general rule exists for certain wellness programs which meet specific regulatory requirements. Pursuant to the PPACA, the government issued final regulations in 2013 addressing the circumstances under which wellness programs provided in connection with group health plan coverage are deemed to comply with the nondiscrimination requirements. The preamble to the 2013 final regulations indicated that the government anticipated issuing future subregulatory guidance.
As such, on April 16, 2015, the government released additional FAQs About Affordable Care Act Implementation (Part XXV) addressing several issues that have been raised since the publication of the final wellness program regulations. These FAQs elaborate on what it means for a health-contingent wellness program to be “reasonably designed” to promote health or prevent disease and indicate that the determination of whether a health-contingent wellness program is reasonably designed is based on all of the relevant facts and circumstances. For example, the FAQs indicate programs designed to dissuade or discourage enrollment in a plan or program by individuals who are sick or potentially have high claims experience will not be considered reasonably designed. Likewise, a program that collects certain health information without assisting participants in making behavioral health choices (such as smoking cessation) may fail to comply with the final regulations because they are not designed to give a participant a reasonable chance to improve health or prevent disease. Additionally, programs that require unreasonable time commitments or travel may be considered overly burdensome and therefore fail to meet the requirements of the final regulations.
Furthermore, the FAQs relevantly expressly state that compliance with the final wellness program regulations under the PPACA is not determinative of compliance with other laws (such as other provisions in the PHSA, the Code, ERISA, HIPAA , and the ADA). This statement is extremely important for employers sponsoring wellness programs to keep in mind, especially in light of the recently released EEOC proposed regulations under the ADA addressing the extent to which employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations.
Separately, on April 16, 2015, the EEOC released long anticipated guidance in the form of proposed regulations and frequently asked questions related to the interplay between employer wellness programs that are part of or provided by a group health plan and ADA rules permitting disability-related inquiries and medical examinations related to voluntary employee health programs. Currently, although the ADA limits the circumstances under which an employer may ask questions about an employee’s health or require an employee to undergo a medical examination, it allows such inquiries and examinations if they are part of a voluntary employee health program. The proposed regulations seek to amend current ADA regulations and interpretive guidance related to certain wellness programs that are employee health programs and use certain incentives to encourage employees to participate in programs that may include disability-related questions and/or medical examinations.
Highlights of the proposed regulations include but are not limited to:
- Voluntary Nature. The proposed regulations explain what it means for an employee health program to be voluntary. For example, the employer may not (1) require an employee to participate; (2) deny coverage under a group health plan or particular benefit package within a group health plan for non-participation or generally limit the extent of such coverage under its health plans for non-participation; or (3) take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees.
- Incentive Maximums. The proposed regulations explain what incentives employers may offer as part of a voluntary employee health program. Specifically, the proposed regulations state that offering incentives to participate in a wellness program that is part of a group health plan does not render the program involuntary, as long as the maximum allowable incentive an employer offers is 30% of the total cost of employee-only coverage. This limit is generally similar to the limit found under the PPACA/HIPAA wellness program regulations for non-tobacco incentives under health-contingent wellness programs. However, unlike under the PPACA/HIPAA regulations, the EEOC’s proposed regulations apply the same limit to participatory wellness programs that ask an employee to respond to a disability-related inquiry or undergo a medical examination. The EEOC’s proposed regulations also generally do not permit an increased incentive limit for wellness programs related to tobacco use. And, the 30% threshold is linked to the total cost of employee-only coverage, regardless of whether dependents are permitted to also participate in the program.
- Notices. The proposed regulations require employers offering wellness programs as part of a group health plan to 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 disclosure, and the methods to be used to prevent improper disclosure.
- Confidentiality. Medical information collected through an employee health program may only be provided to employers in aggregate terms that do not disclose (or are not reasonably likely to disclose) the identity of specific individuals, except as necessary to administer the health plan and for other limited purposes described in the regulations.
- Reasonable Design. Among other requirements, a wellness program (including any disability-related inquiries and medical examinations related to such program) will not qualify for the voluntary plan exception unless it is reasonably designed to promote health or prevent disease. To meet this standard, the program must (1) have a reasonable chance of improving health or preventing disease; (2) cannot be overly burdensome; (3) cannot be a subterfuge for violating the ADA or other discrimination laws; and (4) cannot be highly suspect in the method chosen to promote health or prevent disease.
The EEOC is accepting comments on the proposed regulations until June 19, 2015. The EEOC’s Q&As indicate that while employers do not currently have to comply with the proposed regulations, it is unlikely that the EEOC or a court would determine that an employer violated the ADA if the proposed rules were complied with prior to the issuance of final regulations.
Finally, it is also noteworthy that the Department of Health and Human Services recently issued two additional FAQs regarding (1) how the HIPAA privacy, security, and breach notification rules apply to wellness programs; and (2) how HIPAA restricts the circumstances under a group health plan may allow an employer as plan sponsor access to PHI (including PHI about participants in a wellness program offered through the plan) without written authorization.
This blog post serves as a general summary of the lengthy and comprehensive new guidance. The recently released guidance can be found at the following websites:
This correspondence is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.