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Legal Alert: Equal Employment Opportunity Commission’s Final Rule Amending the Americans with Disabilities Act Regulations

By on June 14, 2016 in Uncategorized with 0 Comments

On May 17, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued its final rule amending the regulations implementing Title I of Americans with Disabilities Act (“ADA”) as they relate to employer wellness programs. In the section below you will find key information as to how the final rule applies to your workplace and the implementation of your employer wellness program.

Q:        What is an employer wellness program?

A:        Many employers have recently implemented health promotion and disease prevention programs for their employees as a benefit within the employer’s group health plan, or separately as a benefit of employment. These programs are referred to as “employer wellness programs.”

Q:        How is the ADA related to employer wellness programs?

A:        The ADA prohibits employers from discriminating against individuals on basis of a disability.  Furthermore, the ADA prohibits employers from obtaining medical information from applicants and employees but it does allow employers to inquire about employee health and/or conduct medical examinations as part of a voluntary health program, such as an employer wellness program. This special exception will be referred to hereafter as the “ADA exception.”

Q:        Why did the EEOC amend the regulations regarding the ADA?

A:        Previously, the EEOC’s ADA regulations did not define the term “voluntary” or explain what constitutes a “health program.” This led to confusion for employers as to when they are able to inquire about employee health or conduct medical examinations as part of the ADA exception explained above. The EEOC has now made efforts to correct these omissions in the amended regulations.

Q:        What is the ADA’s safe harbor provision and does it apply to employer wellness programs?

A:        The ADA’s safe harbor provision allows insurers and plan sponsors (including employers) to use information about risks posed by certain health conditions to make decisions about insurability and cost of insurance coverage. The safe harbor provision does not apply to employer wellness programs because the information that an employer collects from employees as part of an employer wellness program is not used to decide insurability of a specific employee or to set insurance costs.  The safe harbor provision does not apply to employer wellness programs even if they are offered as part of an employer’s health plan.

Q:        Under the amended regulations, when can an employer ask employees to provide medical information as part of a wellness program?

A:        The ADA allows employers to make disability-related inquiries and to require medical examinations as part of a voluntary health program (ADA exception). The key is that a program only fits the definition of a voluntary health program/wellness if it is “reasonably designed to promote health or prevent disease.” The program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a ruse for violating the ADA or other employment discrimination laws, or require employees to incur significant costs for medical examinations.

Q:        What type of wellness programs meet the criteria set forth in the amended regulations?

A:        A wellness program that asks employees to answer questions about their health conditions or have biometric screening or other medical examinations for the purpose of alerting the employee to health risks (ie. high cholesterol, elevated blood pressure) meets the criteria set forth in the regulations.  Also, it is appropriate for wellness programs to collect and use aggregate information from employee health risk assessments to design and offer programs aimed at specific conditions prevalent in the workplace (ie. diabetes, hypertension).

Q:        What type of wellness programs DO NOT meet the criteria set forth in the amended regulations?

A:        Employers cannot ask employees to provide information on a health risk assessment without providing feedback about risk factors or without using aggregate information to design programs or treat any specific conditions. Employers are also not permitted to create a wellness program if it exists merely to shift costs from the employer to the employee based upon their health or if it is used by employer only to predict future health costs.

Q:        Under the new regulations how is “voluntary participation” defined?

A:        In order for an employer wellness program to be considered “voluntary,” it must meet the following requirements:

  • Employer may not require employee to participate; and
  • Employer may not deny any employee who does not participate in wellness program access to health coverage or prohibit an employee from choosing a specific health plan; and
  • Employer may not take adverse action or retaliate against any employee who chooses not to participate in the wellness program or fails to achieve certain health outcomes; and
  • Employer must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and restrictions on disclosure

Also the employer must comply with the incentive limits, explained below.

Q:        What are the incentive limits?

A:        If a wellness program is open only to employees enrolled in a particular health plan, the maximum allowable incentive an employer can offer is 30 percent of the total cost for self-only coverage of the plan in which the employee is enrolled.

When an employer offers more than one group health plan, but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30 percent of the lowest cost major medical self-only plan it offers.

If an employer does not offer health insurance, but wants to offer an incentive program for employees to complete a health risk assessment or have annual medical tests, an employer can offer an incentive up to 30 percent 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 principal place of business.

Q:        Do these incentive limits apply to all employer wellness programs?

A:        No. The incentive limits only apply to wellness programs that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty.

Q:        When do employer wellness programs have to comply with the final rule?

A:        The final rule applies to wellness programs as of 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 incentives permitted under the rule. Any provisions of the final rule which are only clarifying existing obligations apply now.

If you have any questions, please feel free to contact us!

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