On May 16, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued final regulations regarding employers’ use of wellness programs. Such programs seek to promote healthy behavior by employees, often through financial incentives such as reduced healthcare benefits premiums or reduced gym membership costs. The EEOC rules amend existing regulations under the Genetic Information Nondiscrimination Act of 2008 (“GINA”) and create new regulations under the Americans with Disabilities Act (“ADA”).
Although the federal government actively encourages the use of such programs under the Affordable Care Act (“ACA”), the legality of wellness programs under the ADA has remained uncertain. Before these new regulations, the EEOC had been taking the position that many wellness programs violated the ADA because the financial incentives associated with those programs essentially discriminate against those with disabilities. In other words, because of an employee’s disability, the employee may not have been able to participate in some activity under the program and, thus, the employee could not receive the financial incentive.
Under the new regulations, the EEOC has set limitations on the financial incentives employers may provide for participation in wellness programs. Where an employer offers group healthcare benefits, the maximum allowable incentive is 30% of the total cost for self-only coverage under the group plan. As an example, the EEOC explains that where an employee’s self-only coverage costs $6,000 annually, the maximum allowable wellness incentive is $1,800. Where an employer offers more than one group health plan, the maximum incentive is 30% of the lowest cost major medical self-only plan it offers. Where an employer does not offer group health insurance, the regulations set the maximum allowable incentive as 30% of the cost for 40-year-old non-smoker self-only coverage under the second lowest cost Silver Plan available on the state or federal healthcare Exchange applicable in the location of the employer’s principal place of business.
Also, the final regulations permit employers to collect health information for any program that is “reasonably designed to promote health or prevent disease.” They also permit the collection of such information for employees’ spouses. Employers using covered programs will need to disclose the legal uses of the compiled information, and employers may not require employees to waive objection to the sale of the health information as a condition of participation.
These regulations are slated to apply to any wellness programs that run in conjunction with health plans that begin on or after January 1, 2017.
For further information regarding this and other developments, contact a member of the Frantz Ward Labor and Employment Practice Group.
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