H&W: FINAL REGULATIONS: ADA & GINA and Employer Sponsored Wellness Programs – Part 1

The EEOC has issued final regulations on the application of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) to employer sponsored wellness programs.  These final rules expand upon proposed rules issued last year.

Since the EEOC administers both laws, the Commission took care to make sure that the wellness rules under each law were consistent with one another and also consistent with the HIPAA rules for wellness programs.  In some cases, the ADA and GINA rules are substantially identical.  That said, each statute has its own areas of concern and compliance with one, say HIPAA, does not guarantee compliance with any of the others.

Compliancedashboard will be doing a series of blogs in which it will take a deep dive into the intricacies of the ADA and GINA final rules.  This is the first in that series.

The ADA and Wellness

The ADA generally prohibits employers from requiring employees to answer disability-related questions or submit to medical examinations.  However, it contains an exception for voluntary employee health programs.  A long-standing question has been whether or to what extent the availability of incentives/penalties in connection with these programs renders them “involuntary”.  The final rule resolves those questions.

First, a word on scope.

The rule only applies to employee health programs that ask employees to respond to disability- related inquiries and/or undergo medical examinations. This includes wellness programs that are: offered only to employees enrolled in an employer-sponsored group health plan; offered to all employees regardless of whether they are enrolled in such a plan; or offered as a benefit of employment by employers that do not have a health plan.  Wellness programs that do not include disability-related inquiries or medical examinations (such as those that provide general health and educational information) are not subject to the final rule.  The rule does not expand on what constitutes a “disability related inquiry”, but does reference prior guidance on this question.  In our experience, health risk assessments (HRA) featured in wellness programs typically do ask such questions.

Unlike HIPAA, the ADA rule applies without regard to whether the wellness program is also a health plan.  For example, an HRA-only program would not be covered by HIPAA but would be subject to the ADA.

The ADA contains a safe harbor provision which states that an insurer or any entity that administers benefit plans is not prohibited from ‘‘establishing, sponsoring, observing or administering the terms of a bona fide benefit plan based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law.’’  Two court cases have recently upheld wellness programs that imposed penalties far in excess of those that would be permitted under the final rule.   The EEOC has announced that it does not regard itself as bound by these decisions.  Employers that wish to ignore the final rules based on those cases  are strongly urged to consult with counsel.

The rule limits the level of incentives that can be used in a wellness program based on the cost of coverage under a given health plan.  This limit and which health plan should be used will be discussed in detail in later blogs.  However, this is also relevant to the determination of the applicability date of the rule.  That date is the first day of the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the regulation.

With that background, let’s begin our foray into the specifics of the final ADA wellness regulation.

Reasonable Program Design

The proposed rule required that wellness programs be “reasonably designed to promote health or prevent disease.”  The final rule provides examples of when this standard may or may not be met.  Asking employees to complete an HRA and/or undergo a biometric screening for the purpose of alerting them to health risks of which they may have been unaware would meet this standard, as would the use of aggregate information from HRAs by an employer to design and offer health programs aimed at specific conditions identified by the information collected.

On the other hand, a program is not reasonably designed to promote health or prevent disease if it imposes, as a condition to obtaining a reward, an overly burdensome amount of time for participation, requires unreasonably intrusive procedures, or places significant costs related to medical examinations on employees.  A program also is not reasonably designed if it exists mainly to shift costs from the covered entity to targeted employees based on their health or if it exists simply to give an employer information to estimate future health care costs.

In our next blog, we will address what it means for a program to be voluntary.

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