EEOC's Final Rules on

Wellness Programs: Is Your

Program Compliant

June 28, 2016

Sponsored by

Presenters

Ilyse W. Schuman

Co-chair of the Workplace

Policy Institute

Russell D. ChapmanSpecial Counsel

Agenda

• Wellness Programs: A Short History

• ADA and Wellness

• EEOC and Wellness

• EEOC Final ADA Wellness Regulations

• GINA and Wellness

• EEOC Final GINA Wellness Regulations

• Tax Treatment of Wellness Programs

• Privacy and Other Issues

Wellness Programs: A Short History

• 1990: Americans With Disabilities Act

• 1996: HIPAA

• 2006: HIPAA Wellness Regulations

• 2008: ADA Amendments Act

• 2010: Affordable Care Act

• 2013: ACA Wellness Regulations

• 2016: EEOC ADA and GINA Regulations

ACA Wellness Regulations

• Participatory Programs

– Available to all similarly situated individuals

• Health Contingent Programs

– Activity-Only Programs

– Outcome-Based Programs

– Reasonable Alternative Standard

– Rewards

– Annual opportunity

– Reasonable design

ADA and Wellness

ADA and Wellness

• Enforcing the ADA:

– Disability discrimination in terms and

conditions of employment

• Including “fringe benefits”

– Disability-related inquiries or medical

examinations

• Exceptions:

–Job related and subject to business

necessity

–Voluntary wellness program

ADA “Safe Harbor”

• Exempts bona fide employee benefit plans if the

plan is not used as a subterfuge to avoid the

purposes of the ADA, and

– is based on underwriting risks, classifying risks, or

administering such risks that are based on or not

inconsistent with State law; or

– is not subject to State laws regulating insurance

• Are the “voluntariness” exception and the “bona

fide benefit plan” exceptions mutually exclusive?

• Seff v. Broward County

The EEOC and Wellness

EEOC and Wellness

• EEOC’s basic position

• Ruling history

• 2014 EEOC Lawsuits:

– Orion

– Flambeau

– Honeywell

• Lastest salvo: EEOC’s Notice of

Supplemental Authority

EEOC’s Response

• Seff v. Broward County

• EEOC v. Flambeau, Inc.

“.. wellness program qualified

as a "term … of a bona fide benefit plan" within

the meaning of the safe harbor provision..”

“..the safe harbor may extend to

wellness programs that are

part of an insurance benefit

plan..”

“The [EEOC] believes

both cases were

wrongly decided.”

- Preamble to final regulations

EEOC Final ADA Wellness

Regulations

ADA: Disability-Related Questions

• The ADA “voluntariness” exception applies

only to ADA’s “no disability related

question or medical examinations” prong

• Question: What is a “disability related”

question?

• Answer: It is a question the answer to

which would disclose the presence of a

disability or provide information about a

disability.

Disability-Related Questions

• Examples:

– Have you ever been diagnosed or told that

you have: Diabetes, hypertension, heart

trouble, cancer, liver trouble, asthma, etc.?

– Do you get depressed?

– What daily medications do you take?

– How much alcohol do you drink?

– What is your blood pressure?

– What is your BMI?

Non-disability Related Questions

• Examples:

– How often do you eat breakfast?

– How many servings of fruits and vegetables

do you eat each day?

– Do you take a vitamin supplement?

– Do you have a health care directive to

physicians?

– Do you regularly see a physician for routine

health care?

EEOC Final ADA Wellness Regs

• Released May 17, 2016

• Generally will apply to the first plan year

beginning on or after January 1, 2017

– BUT… be careful, some of the rules are just

considered clarifications and are effective

immediately!

• Good faith reliance probably available

• Given EEOC’s litigation history, early

compliance is recommended

Final ADA Wellness Regulations

• Medical examinations and/or disability-

related inquiries allowed, but only if:

– The program is reasonably designed to

promote health or prevent disease; and

– The program is voluntary.

Reasonable Design

• To be reasonably designed to promote

health, a program must:

– have reasonable chance of improving the health of, or

preventing disease in, participating employees;

• e.g., program cannot simply collect health information without

following up with information or advice

• may use information to design program specifically intended

to treat at least of subset of conditions found

– not be overly burdensome;

– not be a subterfuge for violating the ADA or other laws

prohibiting employment discrimination; and

– not be highly suspect in the method chosen to

promote health or prevent disease.

Voluntary

• To be voluntary a program must:

– not require employees to participate (e.g.,

through coercive incentives);

– not be a “gatekeeper” to medical coverage;

– not take adverse action (coercion, retaliation,

intimidation, threats, etc.) based on the

program; and

– must comply with the new notice rules.

Limits on Incentives

• Core element of the new regulations

• Basic rule: The use of financial incentives is

permissible if they do not exceed 30% of total

(COBRA) cost of self-only coverage in group

health plan.

• NOTE: EEOC INCENTIVE RULES ARE NOT

CONSISTENT WITH ACA REGULATIONS

• What if the wellness program is separate from

the group health plan?

• What if no group health plan offered?

• What about Smoking Cessation Programs?

Maximum Wellness Incentives I

1. To be eligible to participate in the

wellness program employee must be

enrolled in a specific group health plan:

– 30% of total cost of employee-only coverage

for that plan

2. Employee need not be enrolled group

health plan and employer maintains only

one group health plan:

– 30% of total cost of employee-only coverage

of the group health plan

Maximum Wellness Incentives II

3. Employee must be enrolled in a group health

plan to participate in the wellness program, but

need not be enrolled in any specific plan:

– 30% of lowest total cost of employee-only coverage

for a “major medical” plan maintained by the

employer

4. Employer does not maintain any group health

insurance or plan:

– 30% of the 2d lowest cost of Silver Plan Exchange

coverage for a 40-year-old nonsmoker at the

employer’s principal place of business

EEOC’s Lowest Common Denominator

• EEOC establishes a lower ceiling

• ACA regs index reward to coverage in which

employee is enrolled

• EEOC indexes to “lowest cost” unless employee

must enroll in a specific plan or employer has

but one plan

• ACA permits indexing to cost of family coverage

• But note: ADA does not apply to spouses or

dependents

– GINA regs address spouses and dependents

ADA vs ACA

Biggest limitation of EEOC ADA Regs:

• No distinction between participatory and

health-contingent programs

• All are treated as outcomes-based

EEOC Thumbs Down to Participatory

Programs

• No wellness program may

– Provide reward in excess of 30%

• Except some tobacco cessation programs

– Deny access to health plan coverage

– Deny access to any health plan or coverage

option

• Example: To participate in “high” plan,

must complete HRA/Health screen,

otherwise must participate in HMO or

HDHP

What About: Tobacco?

EEOC Interpretive Guidance permits 50%

incentive if:

• Compliance with tobacco cessation

wellness program is not determined

through a “test, measurement or screen”

• I.e., compliance determined through

enrollment form, questionnaire, affidavit or

“honor system”

Integration of Tobacco Incentive

• ACA: Wellness aimed at tobacco

cessation may be 50%

– But a separate health-contingent reward

reduces the 50% by up to 30%

• EEOC ADA regs are silent on this

allocation

– Do not apply a HRA/Screening participatory

reward in addition to tobacco reward

– Use allocation method

Coordination with DOL Regs

EEOC DOL

Free scale in exchange

for completing HRQ Premium reduction for

lowering cholesterol

On-site flu shots

ACA/ADA Crackup

• DOL– No incentive limits

for participatory

programs!

– 50% incentive for all

tobacco programs

– Gatekeeper

approach OK for

participatory

program

• EEOC– 30% limit applies to

all programs

– Some tobacco

programs capped at

30%

– Gatekeeper

prohibited

ADA and Reasonable Accommodation

EEOC’s position:

• ADA reasonable accommodation standards apply to

wellness programs

Examples:

• Hearing impaired employee must be provided translator

to attend wellness, nutrition or smoking cessation class

• Employee cannot go through blood draw – test by other

means or waive requirement

• Employee cannot receive inoculation by injection –

inoculate by other means (nasal spray)

Other possible required accommodations:

• Religious objections

GINA and Wellness

GINA and Wellness

Genetics Information Nondiscrimination Act (GINA)

• Makes it illegal to use genetic information in

making employment decisions

• Restricts employers from requesting, requiring

or purchasing genetic information

• Plan may not offer inducements for providing

genetic information

• Genetic information includes family medical

history (including spouses, adopted children)

EEOC’s Basic Premise

• Employer’s request of information about a

“manifested disease or disorder” of

employee’s family member is a request for

genetic information and therefore

PROHIBITED• So spouse’s (or child’s) health risk

assessment or health screen is prohibited

by GINA

Final GINA Wellness Regulations

Final GINA Wellness Regulations

• Apply to all wellness programs

• Limited safe harbor for health risk assessments (“HRA”) that request

spouse’s health information.

• Cannot offer inducement for the spouse to disclose genetic

information outside HRA.

• Limits generally track EEOC’s ADA regulations.

• But note: Spouse gets own reward limitation:

– 30% of cost of employee coverage

– theoretically could go to 60% of cost of employee only coverage if both

spouse and employee comply

– this limit could exceed ADA limit for a health-contingent program – so

test the lower limit

– Requesting spouse’s own genetic information still prohibited unless no

incentive attached

Children Are Out!

• GINA Wellness Regulations:

No inducements permitted for health

information about a participant’s child!

None

Zero

Zip

Nada

Tax Treatment of Wellness Incentives

Tax Treatment of Wellness Programs

• IRS memorandum reminds plan sponsors to watch the

taxation of rewards.

• Employer may not exclude from an employee’s gross

income:

– payments of cash rewards;

– Income reimbursements of premiums for participating

in a wellness program if the premiums for the

wellness program were originally made by salary

reduction through a section 125 plan.

• Wearable devices? Gift cards? Watch the taxation!!

Privacy and Other Compliance

Issues

Privacy and Other Issues

Stand-alone programs that provide health care:

• May be group health plans that must comply

with ERISA, COBRA, ACA, HIPAA, etc.

Wearable devices:

• Many provide location and other personal data –

make sure you are not inadvertently tracking

your employees

• Do not allow connection between these devices

and your computer system!

Questions?

Fragen?

Domande?

¿Preguntas?

Les questions?

Thank you!

Russell D. Chapman

Littler Mendelson, P.C. Dallas, TX

(214) 880-817

rchapman@littler.com

Ilyse W. Schuman

Littler Mendelson, P.C. Washington, DC

202.423.2223

ischuman@littler.com

EEOC's Final Rules on Wellness Programs: Is Your Program Compliant

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