The U.S. Equal Employment Opportunity Commission (EEOC) has released a proposed rule that provides guidance on how wellness programs can comply with the Americans with Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA). We’ll highlight some of the most important provisions.

Wellness programs in a nutshell

Employers that provide group healthcare coverage increasingly offer workplace wellness programs. These programs may include nutrition classes, onsite exercise facilities, weight loss and smoking cessation programs, and coaching to help employees meet health goals. They also might incorporate health risk assessments and biometric screenings that measure an employee’s health risk factors, such as weight and cholesterol, blood glucose, and blood pressure levels.

Some employers offer incentives to encourage their workers to participate in wellness programs, and some offer incentives based on achieving certain health outcomes. Incentives often take the form of prizes, cash, or a reduction or increase in healthcare premiums or cost sharing (including copayments, deductibles, or coinsurance). Incentives may also be framed as rewards to participating employees who achieve certain health outcomes or penalties if participating employees don’t achieve the health outcomes.

ADA and HIPAA issues

Wellness programs must comply with the ADA, which restricts the medical information employers can obtain by generally prohibiting them from making disability-related inquiries or requiring medical exams. The ADA, however, provides an exception for voluntary medical exams (including voluntary medical histories) that are part of an “employee health program.”

Wellness programs also must comply with HIPAA’s general prohibition against discrimination in group health plans based on any health factor. An exception allows premium discounts or rebates to employees—or modification to otherwise applicable cost sharing—in return for their adhering to certain health promotion and disease prevention programs.

Voluntary employee health programs

Under the proposed rule, a wellness program qualifies as an “employee health program” if it’s reasonably designed to promote health or prevent disease in participating employees.

A program that collects information on a health risk assessment to provide feedback to employees about their health risks (such as high cholesterol or elevated blood pressure) is reasonably designed, the rule says. So is one that uses aggregate information from assessments to design programs aimed at medical conditions prevalent in the workplace.

A program is not reasonably designed to promote health or prevent disease if it:

• Imposes, as a condition of obtaining a reward, an overly burdensome amount of time for participating;
• Requires unreasonably intrusive procedures; or
• Places significant costs related to medical exams on employees.

A program also is not reasonably designed if it exists mainly to shift costs from the covered entity to targeted employees based on their health.

The proposed rule lists several requirements for participation in a wellness program to be voluntary. You can’t:

• Require employees to participate;
• Deny access to health coverage or generally limit coverage under your health plans for nonparticipation; or
• Take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees (for example, by threatening to discipline an employee who doesn’t participate or doesn’t attain certain health outcomes).

You must provide a notice to employees clearly explaining which medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.

Permissible incentives

Before issuing the proposed rule, the EEOC had not stated whether employers could offer incentives to encourage employees to participate in wellness programs—or whether incentives would make participation involuntary. The proposed rule states that employers can offer limited incentives to employees for participating in wellness programs or achieving certain health outcomes without violating HIPAA.

The amount of the incentive may not exceed 30 percent of the total cost of employee-only coverage.

For example, if the total cost of coverage paid by both the employer and the employee for employee-only coverage (as opposed to family coverage, for example) is $5,000, the maximum incentive for the employee under that plan is $1,500.

Now what?

Although employers don’t have to comply with the proposed rule just yet, they certainly may do so, the EEOC noted. And many of the requirements set forth in the proposed rule exist in current law. For example, you are already prohibited from requiring participation in a wellness program, denying insurance to nonparticipants, or taking adverse action or retaliating against nonparticipants.

You also must provide reasonable accommodations to allow employees to participate in wellness programs and obtain incentives and ensure that you keep medical information confidential.