The desire to offer a wellness program to employees may seem like a no-brainer. Why wouldn’t employers encourage their employees to adopt healthy lifestyles and thereby hopefully reduce the future medical claims and health insurance premiums of employer-sponsored medical plans? If only it were that simple.
Over the past few years, most employers have utilized the HIPAA / PPACA wellness program regulations as the baseline for designing and administering wellness programs offered in connection with group health plans (“GHP”). Unfortunately, compliance with the HIPAA / PPACA wellness program regulations does not ensure compliance with the final wellness program regulations recently issued by the Equal Employment Opportunity Commission (“EEOC”) under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).
On May 17, 2016, the EEOC finalized additional hurdles for employers to jump in conjunction with the offer of legally compliant wellness programs. Specifically, the EEOC published anticipated final regulations related to wellness programs under the ADA and GINA. These newly issued final regulations are significant because they extend beyond the scope of and do not entirely gel with the requirements of the HIPAA / PPACA regulations. The newly issued final regulations require employers to quickly analyze their existing and anticipated wellness programs to determine which, if any of the regulations apply and what actions need to be taken to comply with the applicable regulations.
There are numerous disparate requirements under the competing sets of final regulations. Here are a few examples:
- Link to GHPs. The HIPAA / PPACA regulations only apply to wellness programs linked to GHPs, whereas the ADA and GINA regulations do not required the wellness program to be linked to GHPs.
- Incentives. The 30% incentive limit set forth in the ADA regulations apply to participatory-only programs which include a medical examination and/or disability-related questions, whereas the HIPAA / PPACA incentive limits do not apply to participatory-only programs (they apply only to health-contingent wellness programs). Additionally, under the ADA regulations, the 30% incentive limit applies if medical examinations are used to determine tobacco use, whereas the HIPAA / ACA regulations permit up to a 50% incentive limit for health-contingent wellness programs related to tobacco use. Under the HIPAA / PPACA regulations, the 30% incentive limit is based on the single coverage under the medical plan in which the employee is enrolled (for employee-only coverage); if the wellness program also applies to the spouse, then the limit is based on the medical plan in which the couple is enrolled. Under the ADA regulations, the cap is based on 30% of the total cost of the single coverage, even if the spouse participates in the wellness program. Under GINA, the 30% inducement allowed for the collection of a spouse’s health information is in addition to the 30% allowed for the collection of an employee’s genetic information, so the total inducement allowed under any program collecting both types of information could be as large as 60% of the cost of self-only coverage under the benchmark plan.
- Notice. The ADA regulations require employees to receive notice detailing certain information about the wellness program, regardless of whether the program is participatory in nature (model language is available on the EEOC’s website). These notice requirements are distinct from the HIPAA / PPACA notice requirements (which also only apply to health-contingent wellness programs).
Given the disparate regulatory requirements, even employers who are comfortable that their wellness programs are HIPAA / PPACA compliant should take another look at their program in connection with the new ADA and GINA final regulations. Employers offering (or thinking about offering) wellness programs need to immediately have such program analyzed in conjunction with the HIPAA / PPACA, ADA, and GINA regulations to ensure compliance with all three laws. For example, employers need to:
- Ensure all incentive limits are being adhered to (the size of the incentive may need to be reduced);
- Review all wellness program materials to ensure compliance with the various notice requirements (additional and updated notices may be required);
- Determinate what, if any, authorizations need to be obtained.
- Review health risk assessment questions to ensure compliance with all applicable laws;
With respect to the maximum incentive rules and certain notice requirements, the newly issued final regulations are scheduled to apply the first day of the first plan year beginning on or after January 1, 2017. The EEOC considers the remaining portions of the final regulations to be clarifications to law currently in effect. So time is of the essence in ensuring compliance.
The competing regulations make it increasingly difficult for employers to circumnavigate the various wellness program requirements. The most restrictive requirements control and therefore employers need to consider all three sets of final regulations.
Additionally, when administering wellness programs, employers and group health plan sponsors also need to take into account the impact of the HIPAA administrative simplification rules in conjunction with such programs. It is also worth mentioning that the IRS recently issued new guidance related to taxation issues associated with wellness programs.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or firstname.lastname@example.org.