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EEOC Regulation of Employee Wellness Programs

Employers are increasingly offering wellness plans designed to improve employee health, enhance productivity and help control health care costs. The ACA allows employers to provide financial incentives to participants in a wellness program of as much as 30 percent of the total cost of coverage when tied to participation in the program. The Equal Employment Opportunity Commission (EEOC) finalized regulations in May 2016 governing employer wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The ADA and GINA contain exceptions the prohibition of asking employees about their own health conditions or those of their family members when that information is collected as part of a voluntary wellness program. The EEOC’s final regulations governing the treatment of employer wellness programs under the ADA and GINA are not entirely aligned with the ACA regulations. The differences between the EEOC’s rules and the ACA regulations complicate the task of designing compliant wellness programs.

The final ADA wellness regulation includes standards on what makes a wellness program “voluntary.” To be considered voluntary, an employer cannot require employee participation in the program. Nor can an employer deny coverage under any of its group health plan (or in particular benefit packages within its group health plan) for non-participation or limit the extent of benefits.

One of the most significant areas of misalignment with the ACA involves the calculation of the allowable financial incentives. Under EEOC’s rules, the total allowable incentive (financial or in-kind) cannot exceed 30 percent of the total cost of self-only coverage. In contrast, the ACA authorizes incentives of up to 30 percent of the cost of coverage in which the employee is enrolled.

Under the final GINA wellness regulations, an employer may offer a limited incentive for an employee’s spouse as part of a voluntary employer-sponsored wellness plan as long as each of the requirements concerning health or genetic services provided on a voluntary basis is met.

Consistent with the ADA final rule, the maximum total inducement for a spouse to provide information about his or her health status equals 30 percent of the total cost of the employee’s self-only coverage.

Outlook: Legislative proposals to encourage and reaffirm ACA compliant employer-sponsored wellness programs were introduced in the 114th Congress. Lawmakers in support of employer-sponsored wellness plans expressed concern over the EEOC’s final regulations “Wellness programs are the only part of Obamacare that everyone agreed on—everyone except the EEOC,” said Sen. Lamar Alexander (R-TN). “Congress was clear in its support of workplace wellness programs in the health care law—just about the only provision in the law with bipartisan support—and the Departments of Health and Human Services, Labor and Treasury were clear in their regulations implementing the law. It seems the EEOC is the only one missing the mark.”

As a result, proposals will likely be introduced in the 115th Congress to provide certainty to employers offering innovative employee wellness programs and to eliminate confusion for employers offering employee wellness programs that lower health insurance premiums to reward healthy lifestyle choices. 

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