FINALLY – The EEOC Proposes Wellness Program Regulations

Authored by Dannae L. Delano, Jamie M. Westbrook

May 01, 2015

On April 16, 2015, almost 2 years after it announced guidance was needed, the Equal Employment Opportunity Commission (EEOC) released proposed regulations covering wellness programs that involve disability-related inquiries or medical examinations. The proposed wellness program regulations apply to health standard-based wellness programs, which can be either participatory or outcome based. The release follows several EEOC enforcement actions against employers alleging that wellness programs sponsored by those employers violated the Americans with Disabilities Act (ADA), despite compliance with 2013 regulations issued jointly by the Department of Labor (DOL), the Department of the Treasury (Treasury), and the Department of Health and Human Services (HHS) permitting such programs under the Employee Retirement Income Security Act (ERISA) and the Affordable Care Act (ACA). The proposed regulations are somewhat consistent with existing DOL guidance on employer-sponsored wellness programs; however, the EEOC requested comments on multiple topics that could significantly alter the regulatory requirements (i.e., whether additional protections are necessary for low-income individuals).

The EEOC takes issue with health standard-based wellness programs with incentives and rewards because the incentive or reward may be so valuable that eligible individuals are economically coerced into participating. Thus, the programs violate the ADA requirement that the program be voluntary. The EEOC’s proposed regulations provide that a wellness program will be considered voluntary if it meets the following requirements:

  • It does not require employees to participate;
  • It does not make participation in the wellness program mandatory to receive group health plan coverage;
  • It does not penalize non-participation (other than the failure to receive the reward); and
  • When it is part of a group health plan, employees receive a notice that describes: (1) the medical information that will be obtained and the purposes for which it will be used; and (2) explains the restrictions on disclosure of the information (in addition to the required Health Insurance Portability and Accountability Act notification).

The EEOC’s proposed regulations diverge from the current DOL/Treasury/HHS regulations in several ways:

  • Extending the 30% maximum award limitation to participatory wellness programs that require employees to answer a health questionnaire with disability-related inquiries or take medical examinations (the DOL/Treasury/HHS regulations only apply the 30% maximum reward to outcome based programs).
  • Setting the maximum reward at 30% of the self-only cost of coverage – taking into account both the employee and employer share of the cost (the DOL/Treasury/HHS regulations allow a reward to be a maximum of 30% of the cost of family coverage if the wellness program is extended to covered dependents).
  • The EEOC’s restricts tobacco-based wellness programs to the 30% maximum reward limitation (the DOL/Treasury/HHS regulations allow tobacco-based programs to use the 50% maximum reward limitation allowed by the ACA).
  • The proposed EEOC guidance includes new notice requirements such as: (1) what medical information will be obtained; (2) who will receive the information; (3) how the information will be used; (4) restrictions on disclosure of the information; and (5) methods the covered entity will employ to prevent improper disclosure of the medical information.

What this means to you – Proposed regulations are better for employers than EEOC enforcement actions in the absence of guidance. Given the wide-range of comments requested, the final regulations could be significantly different than what the EEOC has proposed. Employers should review all current wellness programs in light of the proposed EEOC regulations and consider submitting comment letters if the proposed EEOC regulations require significant changes to their programs.

If you have any questions regarding wellness programs or any other employee benefits or labor matter, feel free to contact Dannae Delano or Jamie Westbrook.

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