Feds finalize rules around incentives in employee wellness programs

By Aditi Pai
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The Equal Employment Opportunity Commission (EEOC) has set limits on the monetary value of incentives that employers offer to employees and their spouses to convince them to contribute specific health information to a wellness program, according to the commission's final rules released this week. The rules take effect at the start of 2017.

The final rules explain how employers that offer wellness programs that collect health information for employees and their spouses can comply with Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA). 

"The EEOC received comments on both rules from a broad array of stakeholders and considered them carefully in developing this final rule," EEOC Chair Jenny R. Yang said in a statement. "The Commission worked to harmonize HIPAA's goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require that participation in certain types of wellness programs is voluntary. These rules make clear that the ADA and GINA provide important safeguards to employees to protect against discrimination."

The ADA rule only applies to wellness plans that offer rewards to employees who respond to disability-related questions or to take medical examinations. And the GINA rule only applies to wellness programs in which a portion of the incentive will be given to an employee's spouse if they answer questions about their current or past health status or take a medical examination. 

According to the EEOC, employers are able to offer employees incentives that are up to 30 percent of the cost of self-only coverage, meaning not inclusive of costs for family or other dependents. The term "incentives", in this case, refers to financial incentives as well as in-kind incentives, for example reductions in insurance premiums, cash, time-off awards, prizes, and other items of value. If the employer offers multiple health plans of varying price and offers a wellness program that isn’t tied to a specific plan, the incentive value must be no higher than 30 percent of the lowest priced plan.

Employers who do not offer health insurance can still offer incentives for employees and their spouses who complete an HRA or share information about their current or past health status, but this incentive is also limited. Employers can offer an incentive that is up to 30 percent of the total cost to a non-smoking 40-year-old who is purchasing coverage under the second lowest cost Silver Plan through the state or federal exchange in the employer’s principal place of business, according to the EEOC.

The final rule also lists a number of requirements that must be met for an employee’s participation in a wellness program that asks for disability-related information or submit to medical examinations. An employer can’t require an employee to participate, deny an employee access to health coverage or the ability to choose a certain plan, or take adverse action against an employee that doesn’t participate.

One change from the proposed Genetic Information Nondiscrimination Act (GINA) rule is that the rule applies to all wellness programs, instead of just programs that are part of group health plans.

"For most large employer wellness programs, it's business as usual,” National Business Group on Health CEO Brian Marcotte said in a statement about the final rules. “Though we are still reading the fine print, the rules appear to contain no big surprises. All in all, the rules are very much in line with what the EEOC proposed last year. While we may have hoped for some additional flexibility, the rules do what the EEOC was asked to do -- clarify for employers where their wellness plan incentives stand with respect to ADA and GINA compliance.”

Marcotte added that some of the highlights he noticed in the final rules were that the EEOC banned plan designs that provided better plans to employees who completed health assessments or biometric screenings and that the EEOC prohibited employers from offering incentives to children who participate in health assessments and biometric screenings.

The Equal Employment Opportunity Commission (EEOC) has sued three different companies in the last two years on behalf of employees required to submit to screenings or face higher premiums if they decline. Earlier this year, a judge ruled against EEOC, following a 2011 Florida precedent. The court said that a safe harbor provision in the ADA protects employers who are “establishing, sponsoring, observing, or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks”.

The other two companies were Orion Energy Systems and Honeywell. The Orion suit is still pending and the Honeywell suit, which MobiHealthNews covered at the time, was essentially thrown out: the Federal court in Minnesota declined the motion for injunction but didn’t rule on the merits of the case.