Monday, May 4, 2015
Wellness Rules – What Employers Need to Know
By: Tommy Eden
The employer community has been waiting for years to receive guidance from the Equal Employment Opportunity Commission on wellness programs and how an employer’s obligations under the Americans with Disabilities Act intersect with its rights and obligations under the Health Insurance Portability and Accountability Act (as amended by the Affordable Care Act).
As employer wellness programs have become more popular, many employers began offering specific rewards or penalties to employees based on whether they participated in the programs and even on whether they achieved certain “results.” The HIPAA and the ACA specifically authorize wellness programs to offer incentives but it was possible that an employer could offer a wellness program that was authorized and lawful under the HIPAA/ACA but still be vulnerable to charges and lawsuits under the ADA. The EEOC’s proposed rule seeks to address this problem, and for the most part, it should be welcomed by employers who offer wellness programs.
What does the proposed rule say, in a nutshell?
The proposed rule says that a wellness program can still be “voluntary” for ADA purposes if the program provides “incentives” for employees (both rewards and penalties), as long as the employer complies with the wellness incentive requirements of the HIPAA/Affordable Care Act.
There are two caveats: The wellness program would have to be associated with a group health plan (either insured or self-insured), and the EEOC proposals do not exactly match the HIPAA/ACA rules, although they are reasonably close.
Under the HIPAA/ACA scheme, there are two types of wellness programs. A “participatory” program is one that rewards employees just for participating and does not require a specific goal to be met. (An example would be an employer who reimburses employees for fitness club memberships.) Under the HIPAA/ACA, participatory programs can be offered without limitation, as long as they’re available to all similarly situated individuals.
The other type of wellness program is a “health-contingent” program. There are two types of “health-contingent” programs: (1) activity-only programs, in which the employee is rewarded for completing an activity but doesn’t have to achieve or maintain an outcome (for example, “we’ll pay you $100 if you walk a mile three days a week for a year”); and (2) outcome-based programs, in which employees are rewarded for achieving or maintaining results (for example, “we’ll pay you $100 if you keep your BMI at or below 25 for a year, or if you quit smoking”).
If the program is health-contingent, employers are allowed to offer incentives (carrots or sticks) if –
Employees are allowed to try to qualify at least once a year,
The total reward offered doesn’t exceed 30 percent of the total cost of employee-only coverage under the plan or the total cost of family coverage if dependents are also allowed to participate in the program ("total" means the employee’s and the employer’s share). The percentage is up to 50 percent for tobacco prevention or cessation.
This is only a summary of the excellent full 6 page client bulletin by my law partners Brian Magargle and Robin Shea, with detailed compliance suggestions for employers, which can be found at http://www.constangy.com/communications-581.html. Tommy Eden is a partner working out of the Constangy, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at email@example.com or 334-246-2901. Blog at www.alabamaatwork.com and follow on twitter tommyeden3