It is a well known fact that a healthier work force means lower insurance costs. That’s good for employers. The question has always been how to get healthier employees. The answer is simple: pay them. And this is how employee wellness plans came into being.
It all sounds so simple that it seems unthinkable that there could be an employer without a wellness plan. The problem is that wellness plans were not clearly regulated. The EEOC’s new regulation attempts to remedy this problem and clarify what is necessary for such plans to be compliant with the Americans with Disabilities Act (“ADA”).
To be ADA compliant, wellness plans that require medical information and examinations must be voluntary, they must be made available to all employees, they must provide for reasonable accommodations, and employers must keep all medical information obtained confidential. In addition to these requirements, the EEOC issued the new rule in order to provide guidance on the issue of incentives that may be offered to employees in order to get them to participate in wellness programs. It is not difficult to understand what it means to make wellness plans available to all employees, to provide for reasonable accommodation (so that hearing or visually impaired employees can participate) and to keep medical information private. However, it is much more difficult to know what it means for a plan to be truly “voluntary” and what incentives may be offered to employees such that the incentive itself does not make a plan compulsory. To that end, the EEOC sought comments and issued the new rule.
In an effort to clarify what it means for a plan to be “voluntary” the new rule gives the following guidance:
• The plan may not require an employee to participate;
• The plan may not deny any employee who does not participate access to health coverage or prohibit an employee from choosing a particular plan; and
• The plan may not provide for taking adverse action, retaliating, interfering with, coercing, intimidating or threatening employees who choose not to participate in the plan or fail to achieve certain health outcomes.
The new rule also requires that employers provide employees with a notice that clearly explains how their health information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure of information.
Finally, there is the issue of incentives. Since incentives could run the gamut from employer to employer, the EEOC has given some clarity. Employers who offer wellness plans only to employees enrolled in a particular plan may provide a participation incentive of up to 30 percent of the total cost for individual coverage for the plan in which the employee is enrolled. If the employer offers more than one group health plan, then the employer may offer a maximum incentive of 30 percent of the lowest cost major medical individual plan that it offers. The idea behind these incentive limits was to set the level such that it would not be so high as to be considered coercive and destroy the voluntary nature of plan participation. After all, if the employer offered 75 percent of the plan cost as an incentive for participation, who could afford not to participate.
In this post, we’ve covered the highlights of this new regulation. However, wellness plans are complicated even with the guidance now provided by the EEOC. For instance, the rules regarding incentives don’t apply if all that an employee is required to do under the plan is participate in a certain activity, such as attending a weight loss class (as opposed to providing medical information and/or participating in a health screen). Also, the incentive rules don’t apply if an employee participates in a smoking cessation program where he is only asked about tobacco use, as opposed to being tested for nicotine use. In the above instances where no medical information is given or obtained, the incentives have no limits.
In short, even with the new regulation, employee wellness programs are complicated. If not properly administered, they can lead to discrimination claims under the ADA. The best practice for employers is to contact their attorneys to review existing plans for compliance with the new rule, and if they don’t have a wellness plan but are considering one, to consult with counsel in the development of the plan.