Is Your Wellness Program “Well” According to the EEOC?

On Monday, April 20, 2015, the EEOC took a big step towards clarifying some hot button questions concerning the Americans with Disabilities Act and employer wellness programs by issuing a notice of proposed rulemaking. Much confusion has been generated in recent years over how wellness programs interact with the ADA. By providing notice of proposed rules, the public now may provide comment before these rules go into effect.

A wellness program is offered as part of an employer’s health insurance benefits. It is intended to provide an incentive to improve any participant’s health. Wellness programs are divided into two categories: (1) participatory or (2) health contingent. A participatory wellness program provides a reward for showing up. That is, an employee might receive reimbursement for maintaining a gym membership. A health contingent wellness program requires an individual to perform. For example, an employee might receive a reward under the wellness program if he or she quits smoking.

Wellness programs received a stamp of approval of sorts from the Obama Administration when in 2013 the Departments of Health and Human Services, Labor, and Treasury issued final rules on wellness programs following implementation of the Affordable Care Act. Generally, these final rules set limits on the effects and standards of wellness programs out of concern for the safety of some participants.

However, in recent years, the EEOC has raised some eyebrows over litigation that addresses employers’ attempts to implement certain wellness programs. Some of these lawsuits are occurring right here in our backyard of Wisconsin. For example, in October 2014, the EEOC announced a lawsuit against an employer that alleged, in part, the employer’s wellness program required medical examinations and made disability-related inquiries in violation of the ADA. In another suit announced by the EEOC, an employer was alleged to have also violated the ADA’s prohibition against disability-related inquiries through the employer’s requirement that employees complete biometric testing as part of its wellness program.

Since the EEOC filed these lawsuits, many employers and practitioners have begged for clarification on when a wellness program conflicts with the ADA. Much of the confusion comes from the ADA allowing health-related inquiries or medical examinations when they are voluntary. Determining what exactly is permissibly voluntary or impermissibly required by an employer is perhaps the most significant issue the proposed rules, available here, seek to clarify. On this issue, the proposed rules explain:

“[T]he maximum allowable incentive for a participatory program that involves asking disability-related questions or conducting medical examinations (such as having employees complete a [Health Risk Assessment]) or for a health contingent program that requires participants to satisfy a standard related to a health factor may not exceed 30 percent of the total cost of employee-only coverage.”

Thus, the EEOC’s proposed rule does “well” to add some certainty to this area. It provides a hard number to refer to in examining a wellness program. Employers can now look at the value of the incentive they wish to provide and compare it to the cost of health benefits to the individual employee and determine whether their wellness program complies with the ADA.

Other useful materials provided by the EEOC related to the new proposed rules include a Fact Sheet for Small Businesses and a Q&A document.

The public has 60 days or until June 19, 2015 to provide comment on the proposed rules. Stay tuned to the Walcheske & Luzi blog for an update when the final rules go into place.