The Equal Employment Opportunity Commission is offering businesses long-awaited guidance on employee wellness programs, condoning controversial financial incentives while also raising some questions about other practices.
The EEOC is out with proposed regulations trying to synchronize Title 1 of the Americans with Disabilities Act with the Affordable Care Act's provisions for workplace wellness programs in group health plans. The proposal comes after a number of high-profile lawsuits filed by the EEOC on behalf of employees who feel they were mistreated or wrongfully terminated for opting out of wellness programs with steep financial penalties.
The proposed regulations largely approve of the various initiatives many American companies are now spending an average of $693 per worker on-- health risk screenings, biometric testing, diet and exercise interventions and rewards or penalties tied to participation. But they also emphasize that the programs must be voluntary and nondiscriminatory.
"The EEOC worked closely with the Departments of Labor, Health and Human Services, and Treasury in developing this NPRM to harmonize the ADA's requirement that medical inquiries and exams that are part of an employee health program must be voluntary, and HIPAA's goal of allowing incentives to encourage participation in wellness programs," said EEOC Chair Jenny Yang.
While the ADA, enacted in 1990, limits the extent to which employers can ask about their workers health conditions or require them to undergo medical exams or screenings, the range of screenings used in wellness programs are allowed as long as they are voluntary.
Integrating all of those rules with the ACA, the EEOC's proposed regulation establish several conditions for a wellness program to be considered voluntary and thus in compliance.
For one thing, the agency wrote, any wellness program requiring worker screenings or health disclosures "must be reasonably likely to promote health or prevent disease."
Second, employers cannot require an employee to participate. Third, they cannot deny coverage for any health plan or benefit for those who don't participate. Fourth, employers cannot "take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten" employees who do not participate.
Fifth, if the wellness program is part of a group health plan, employers need to offer an explanation of the type of health information that will be collected, how it will be used and any restrictions on its use or disclosure. Finally, the incentives in the programs--whether rewards or penalties in the form of higher premiums--cannot exceed 30 percent of the total cost of the employee-only coverage spending.
The EEOC gave an example of how to apply the 30 percent standard: "If a group health plan's total annual premium for employee-only coverage (including both employer and employee contributions towards coverage) is $5,000, the maximum allowable incentive an employer could offer to an employee in connection with a wellness program that includes disability-related questions (such as questions on a HRA) and/or medical examinations is $1,500 (30 percent of $5,000)."
In at least one complaint to the EEOC, workers have alleged being denied the employer-share of premiums upon opting out, and some consumer advocates have argued that even the 30 percent standard authorized by the ACA is questionable. "Is a plan that varies premiums by 30 percent truly voluntary?" asked University of Michigan law professor Nicholas Bagley in an Incidental Economist blog post. "Might such a plan violate the ADA, even if it was authorized by the ACA?"
"I think most people would say that giving people a choice of answering questions or paying several thousand dollars is not a voluntary choice," Jennifer Mathis, director at the Bazelon Center for Mental Health Law, told Kaiser Health News. "That makes it coercive."
But, that the EEOC approved the 30 percent standard and retreated from concern about coercion may be a sign for the business community to keep moving ahead with many of their initiatives. With some exceptions, most employer wellness programs likely already meet these conditions.
"We will be examining the EEOC's proposed rule to ensure it does not undermine the value (wellness) programs provide," said Gary Loveman, chairman and CEO of Caesars Entertainment and and chair of the Business Roundtable's committee on health and retirement.
For the condition barring programs from limiting benefits for employees who do not participate, there could be a conflict with disease management programs that offer additional benefits tied to participation. "Usually, those types of programs do not include a penalty for non-participation, but it would be helpful to see a carve-out for these types of programs," wrote Rylands and Van Fleet.
The EEOC, taking comment on the proposed regulations through the end of June, did signal that it will continue to follow the issue. The independent agency is also seeking comment "on whether additional protections for low-income employees are needed," 30 percent of a health insurance premium being significant for modest earners.