Businesswoman arriving at gym
Wellness & Prevention Print

EEOC Issues Rules for Employer Wellness Programs

The Scoop


The Equal Employment Opportunity Commission (EEOC) just issued new rules that clarify how employer wellness programs can use financial incentives to promote employee participation. 


Overview


  • Employer wellness programs use incentives to boost employee participation
  • Federal regulations governing wellness programs previously conflicted
  • Final rules provide consistency between ACA, ADA, and GINA regulations

The Details


Employer wellness programs have become a growing trend in recent years. As companies look for ways to boost morale and cut healthcare costs, many have been adopting wellness programs that provide employees with financial incentives to participate. 


Wellness programs are organized, employer-sponsored programs and activities offered to employees (and sometimes their families) to encourage health promotion and disease prevention. They can be offered as part of an employer-sponsored group health plan or as a separate benefit of employment.


Employees that choose to take part in a health risk assessment, biometric screening, or other health-related activity can receive incentives in the form of monthly premium discounts or reduced cost-sharing; paid-time-off; or even cash or gift cards.1 On the other hand, these incentives can also come in the form of penalties for not participating. 


These incentives have been a topic of debate and ultimately prompted the EEOC to issue new rules clarifying the extent to which employers can offer financial incentives in their wellness programs. Why all the commotion? Let’s back up.


The background story


The Affordable Care Act (ACA), the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA) all have regulations pertaining to employer wellness programs, but, until now, they conflicted in several ways.


The ACA encourages employers to create incentives for employee participation in workplace wellness programs. And while both the ADA and GINA prohibit employers from asking health-related questions and performing medical exams, they make an exception for voluntary wellness programs (keyword: voluntary).2,3 However, the ADA does not specify if employers can offer incentives to encourage employee participation in these programs.4


In 2014, the EEOC sued several companies after they penalized certain employees for not participating in their wellness programs (such penalties often come in the form of a higher premium), which the EEOC said violates the ADA. For example, the EEOC filed a lawsuit against Orion Energy for shifting the full premium amount to an employee after she declined to participate in their program.5 


By imposing a penalty, the question arose: were these really “voluntary” wellness programs?


The rules recently issued by the EEOC answer that question. Turns out, penalties are allowed—to a certain extent. 


The final rules


The ADA rule clarifies that a program is considered voluntary as long as the incentives, whether in the form of reward or penalty, do not exceed 30% of the total cost of self-only coverage.6 Hint: that means penalties are considered an incentive.


In the Orion example above, the penalty for not participating was 100% of the premium amount. Thanks to the final rule, the penalty now cannot exceed 30% of that amount. The ADA rule also requires employers to provide participating employees a notice outlining what medical information will be collected and how it will be used and shared.7


The GINA final rule imposes the same 30% cap on incentives as it relates to a spouse’s participation. Incentives are only allowed for health assessments and biometric screenings and cannot apply to family health history or genetic-related questions.8 Also, employees’ children (both minors and adults) are not allowed to disclose their current or past health information at all. 


Most importantly, programs must be designed to promote health or prevent disease and can’t be used to simply shift health costs onto employees or to estimate future healthcare costs.9 


The final rules will go into effect in 2017 and apply to all workplace wellness programs, including those that don’t require enrolling in a health plan to participate.