December 29, 2015
Employer wellness programs have become a popular trend in the last decade in an effort to enhance the health movement across the United States. In addition to promoting a healthy lifestyle, employer wellness programs are also used to curb rising health care costs. However, 5245073.10 32 despite the best intentions of employers and the apparent support the programs receive from the Act, it is possible for employers offering wellness programs that obey the rules and regulations of the Act may still be in violation of other federal laws, such as the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act ("GINA").
A. Financial Incentives for a Healthy Lifestyle and Requirements for Wellness Programs Under the Affordable Care Act.
It is perhaps the most common to see employers who offer wellness programs to provide financial incentives, such as discounted health coverage, for employees who participate in such programs. However, such financial incentives may attract unwanted attention from agencies such as the EEOC, which question at what point does the financial incentive to participate in the wellness program actually become a penalty to those who do not participate?
Under the Affordable Care Act, there are two types of wellness programs that an employer may offer. The first type of wellness program is classified as Participatory, and the second wellness program is classified as Health-Contingent. Participatory wellness programs do not require employees to participate in any activity involving a heath factor or to meet any particular standard related to health, such as joining a gym or having a certain cholesterol level, in order to receive a reward. On the contrary, Health-Contingent wellness programs do require that the employee engages in an activity related to a health factor in order to obtain the incentive, or achieves a specific health-related outcome in order to obtain the incentive.
Health-Contingent wellness programs may attract more attention than the Participatory programs, simply because of the difference in program characteristics. For example, Participatory programs are often easy to achieve, such as participating in a nutrition program. Health-Contingent programs may be more difficult to achieve, such as having a certain body mass index ("BMI"). Because of this distinction and who may theoretically participate in Health-Contingent programs, the regulation of rewards or obtainment of incentives is stricter for these programs and may attract more attention from the EEOC if not implemented and followed correctly.
Although the EEOC has yet to issue any strict guidelines or case law regarding Health- Contingent program requirements for obtaining rewards, the Act has delineated the following requirements that Health-Contingent programs must meet in order to offer rewards and run afoul of the law:
1. The maximum permissible reward is 30 percent of the cost of coverage (up to 50 percent for programs designed to prevent or reduce tobacco use);
2. Employees must have the opportunity to qualify for the reward at least once per year;
3. The program must be reasonably designed to promote health or prevent disease
4. All similarly situated individuals must be eligible for the same reward, meaning that individuals must be offered (a) a reasonable alternative standard for obtaining the reward if it is medically inadvisable or 5245073.10 33 unreasonably difficult for medical reasons to satisfy the standard (for activity-only programs), or (b) a reasonable alternative means for obtaining the reward (or a waiver of the applicable standard) if the individual does not meet the initial standard for any reason (for outcomebased programs); and
5. All plan materials must disclose that a reasonable alternative standard is available.
B. Health-Contingent Programs and the Americans with Disabilities Act
Under the Americans with Disabilities Act (ADA), employers are generally forbidden from asking employees questions related to disability or asking employees to submit to medical exams, unless the inquiries or examinations are integral to the job and are a business necessity.
According to the ADA, wellness programs may include disability or health related questions or exams only if the program is voluntary. The EEOC defines “voluntary” to mean that participation in the program is not mandated and employees who decide not to participate
are not punished. Unfortunately, the EEOC has yet to provide further guidance beyond the mere definition of “voluntary.”
While gun-shy employers may go forward with wellness programs that offer rewards that are below the levels endorsed by the Affordable Care Act, it is uncertain whether the EEOC would consider a program involuntary, even at those lower levels if non-participation gave even
the appearance of punishment for non-participation. Other alternatives that are available to employers who do not want to risk EEOC investigation based on a wellness program may include offering non-financial incentives or offering programs that do not involve medical exams or health or disability-related questions. Although these alternatives may be safer for the employer, they may also provide less of an incentive for participation.
C. Wellness Programs and GINA
As explained above, GINA prohibits employers from requesting employees to provide genetic information about themselves or their families. An exception allows the acquisition of genetic information about an employee or his or her family members when an employer offers a wellness program on a voluntary basis. 29 C.F.R. § 1635.8(b)(2). An employer, however, generally may not offer financial inducements for individuals to provide genetic information as part of a wellness program. 29 C.F.R. § 1635.8(b)(2)(ii).
Genetic information is defined in 29 C.F.R. § 1653.3(c). However, the most relevant part of the definition for employers implementing wellness programs includes information about an employee's genetic tests or information about the manifestation of disease or disorder in family members of the individual. GINA defines genetic tests as an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detect genotypes, mutations, or chromosomal changes. Therefore, employers should make sure their wellness programs do not offer financial incentives for genetic tests or for providing family medical histories.