Hello again! Last week we were talking about the EEOC’s new rules about Employee Wellness Programs under the ADA. We defined “wellness programs”, then we talked about how the ADA applied. We learned that while you can ask health-related questions and require participants to undergo medical examinations, you cannot require employees to participate in the wellness program. We also touched on the interplay with HIPAA and the Affordable Care Act. (Click here for review or if you missed that post.) But wait there’s more. Let’s get back to it then– you guessed it– after the jump…
(image from hrwatchdog.calchamber.com)
Last week we learned that new rules tell us what makes a wellness program voluntary within the meaning of the ADA. So, what’s a voluntary wellness program. Voluntary participation in a wellness program, means an employer may not: a) require any employee to participate; b) deny any non-participating employee access to health coverage or prohibit him/her from choosing a particular health plan; and c) take any other adverse action against, intimidate, interfere with, coerce or threaten any non-participating employer or one who fails to achieve certain health outcomes. Employers also must notify employees as to what medical information will be obtained, how it will be used, who will receive it and the restrictions on disclosure. Employers must also comply with the rules’ incentive limits.
Do the rules apply to all wellness programs that include incentives? No, only to those that require employees to answer disability-related questions or undergo medical examinations to earn a reward or avoid a penalty. Wellness programs that merely require employees to engage in certain activities, such as attending a nutrition class or engage in a certain amount of exercise each week are not subject to these rules. Therefore, incentives under these programs can be more than 30%.
So what incentives limits apply to wellness programs subject to the new rules? For wellness programs offered as part of a particular insurance plan (as opposed to other group health plans offered by the employer) an employer can offer up to 30 percent of the total cost for self-only coverage for that plan. For example, if self-only coverage under a plan is $3000, the employer can reward the employee up to $900 for participating in the program and/or achieving certain health outcomes — and presumably, can penalize an employee up to the same amount for not participating and/or achieving certain health outcomes. Employers can also offer the same level of incentive if it offers only one group health plan, but allows any employee to participate in the wellness program regardless of whether s/he is actually enrolled in the group health plan. If an employer offers more than one group health plan, and participation in the wellness program is open to all employees regardless of whether they enroll in a group health plan, the maximum can be capped at 30% of the self-only coverage for the lowest-cost major medical plan it offers.
What if the employer doesn’t offer health insurance? Can it still offer incentives to employees to participate in a wellness program? Yes! Employers can offer incentives to employees to fill out an HRA or have certain tests, such as cholesterol or blood pressure. The incentive then would be up to 30% of the cost that a 40-year old non-smoker would pay for self-only coverage under the second-lowest cost Silver Plan on the state or federal health care Exchange in the location that the employer identifies as its main place of business. So, for example if such a plan would cost $5,000, the employer can offer a maximum incentive of $1500.
Huh? What is the second lowest cost Silver plan, and why is that the benchmark for calculating wellness program incentives for employers who do not offer health insurance? The second lowest cost Silver Plan under the ACA is the benchmark used to determine an individual’s entitlement to a tax credit if s/he obtains coverage on one of the Exchanges. Since it tends to be the most popular plan on the Exchanges, information about its costs is most readily available. Also the cost of this type of plan for a non-smoker over 40 tends to be neither the least nor most expensive plan offered on the Exchanges and reflects Congress’ goals under HIPAA and the ACA to encourage meaningful participation in wellness programs without setting incentives so high as to feel coercive.
OK, but why a 30% limit? This appears to reflect a desire to be consistent with HIPAA regulations, which apply to health-contingent wellness programs requiring employees to perform certain activities or achieve certain health outcomes.
OK, what else? Are we done yet? I’m getting sleepy… Hang in there. Just a few more points. First, disability-related inquiries must be “reasonably designed to promote health or prevent disease”. In other words, the program can’t require inordinate amounts of time or unreasonably intrusive procedures as part of participation or in any other way be a subterfuge to violate the ADA or other applicable laws. So, a program can require employees to answer questions or undergo screenings that alert them to certain health risks (e.g. high blood pressure), or collect information on an HRA and then design and offer programs aimed at specific conditions. You can’t make inquiries and collect medical information and not offer anything though. Also, a program that merely shifts costs from employers to employees based on health or used to predict future health costs is not OK.
Second, employers can only receive the information in aggregate form that does not disclose and is not likely to disclose identity of any specific people, except as may be necessary to administer the program, and may not require employees to agree to sale or any other type of sharing or disclosure of the information. Also, HIPAA privacy rules apply.
Finally, rules as to incentives and the requirement to give notice as to what medical information will be obtained and how it will be used only apply prospectively to programs as of the first day of the first plan year beginning on or after January 1, 2017 in order to determine for the health plan used to determine permitted incentive levels. For example, if the health plan being used to determine incentive levels begins exactly on January 1, 2017, then rules on incentives and notice requirements will apply as of January 1, 2017. If such a plan does not begin under May 1, 2017, then that will be the effective date. All other provisions of the rules, which are clarifications of existing obligations are effective before and after publication of the final rule (in other words assume they’re effective now).
OK, now we’ re done talking about wellness programs under the ADA. Next week we’ll look at the EEOC’s final rule for wellness programs under GINA. See you then and sweet dreams!
Disclaimer: Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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