On April 16, 2015, the Equal Employment Opportunity Commission (EEOC) issued its highly anticipated proposed regulations amending how Title I of the Americans with Disabilities Act (ADA) applies to the increasingly popular employer wellness programs. The proposed rule is designed to provide guidance on the extent to which the ADA permits employers to use incentives to encourage employees to participate in wellness programs. The proposed regulations identify employee health programs, define the nature of a voluntary program, clarify the permissible incentives an employer may offer, and explain the notice and confidentiality requirements. Eighty-eight percent of employers with 500 or more employees offer some sort of wellness program, according to a 2014 survey of employer-sponsored health plans by Mercer, the benefits consultant.

Specifically, the revisions state that an employee health program, including any disability-related inquiries and medical examinations that are part of the program, must be reasonably designed to promote health or prevent disease and must not be overly burdensome or highly suspect in the chosen method of application. The interpretative guidance suggests programs that impose a condition to obtain a reward, require an overly burdensome amount of time to participate, or require unreasonably intrusive procedures are examples of programs that would not meet the newly proposed standard.

Pursuant to the proposal, employees may not be required to participate in wellness programs and they cannot be denied coverage under any group health plans for refusal to participate. In order for an employee’s participation to be deemed voluntary, the employer must provide notice of what medical information will be obtained, how it will be used, who will receive the information, and what safeguards will be employed to prevent the improper disclosure of information.

Additionally, employers are permitted to offer limited incentives to participate, which will not render the programs involuntary. The total allowable incentive, however, may not exceed 30 percent of the total cost of employee-only coverage in connection with the wellness programs. Furthermore, the incentive must be available to all similarly situated employees, regardless of health factors, so as not to violate any provisions of HIPAA or the Affordable Care Act.

Finally, the proposed rule permits disclosure of the medical information obtained from the wellness programs only in aggregate form that does not reveal the employee’s identity. The information must be kept confidential in accordance with all other ADA requirements.

The proposed rule will provide long-awaited guidance for employers on how to ensure their wellness programs offered as part of their group health plans comply with the ADA and the provisions governing wellness programs contained in the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act. The EEOC’s Notice of Proposed Rule Making will be officially published in the Federal Register on April 20, which will trigger a 60-day period for public comment. All employers who offer or are considering offering such programs should take note.

If you have any questions about how these proposed regulations could impact your business, please contact:  

• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Jennifer M. Mannion (267.519.6824; jmannion@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Employment and Labor Practice Group.