How the Proposed EEOC Wellness Incentive Rules May Impact Workplace Wellness Programs

The following article does NOT constitute legal advice and should not be used as such. It is for educational purposes only. Readers should retain legal counsel to obtain definitive answers.

On January 7, 2021, the EEOC finally released the proposed language revising the wellness incentive rules under the Americans with Disabilities Act (ADA) and the Genetic Information and Nondiscrimination Act (GINA). This language was what the wellness industry has been waiting for since the EEOC met on the proposed rules on June 11, 2020.

The EEOC is proposing these changes because of a court order issued in the AARP v. EEOC case. In that case, the judge agreed with the EEOC that the rules issued in 2016 needed to be revised.

Although the proposed rules do not have the force of law yet, and as explained below, may never have the force of law, employers may be wondering how the proposed rules may impact wellness programs. This blog post examines the provisions that are most likely to affect the design and delivery of workplace wellness programs.

However, before examining the proposed rules, it is important to note that immediately after the EEOC released the proposed rules, a new presidential administration took power. As a result of this change in power, the proposed rules have not yet been published in the Federal Register. This means that the sixty day time clock for submitting comments about the proposed rules has not started. Indeed, President Biden released a memo the day of his inauguration freezing all federal rules that had not yet been published in the Federal Register.

Also that same day, the Biden Administration appointed EEOC Commissioner Charlotte Burrows to Chair of the EEOC. Commissioner Burrows was the most vocal in opposing the ADA and GINA rules as proposed at the June 11, 2020 meeting. Her two biggest points of contention were the applicability of the insurance safe harbor under the ADA and the removal of the ADA notice requirement, both of which are discussed below. As a result, it may be a long time before the rules are published in the Federal Register. Given the significant changes at the EEOC since January 20, 2021, it is very likely that when the rules are published in the Federal Register, they will look quite different than the rules released on January 7, 2021. If EEOC Chair Burrows has her way, the insurance safe harbor will not apply to any type of workplace wellness program, and the ADA notice requirement will remain.

Regardless of what might happen, it is useful for employers to know how the proposed rules would impact wellness activities if left in their current form. That way, when the rules are finally published in the Federal Register, the employer community can compare the rules and comment on which version will best serve employers and employees in their effort to improve employee wellbeing.

Below are key changes to the ADA and GINA rules that could impact workplace wellness programs:

1. Elimination of ADA Notices. Currently, employers that collect employee tobacco use status information through biometric screens¹ must provide employees with a notice before collecting such information. To help employers comply with that notice requirement, the EEOC provided sample notices on its website. The EEOC now believes the notice requirement is unnecessary because of the proposed de minimis standard, discussed below.
   
   As noted above, Commissioner Burrows, who is now the EEOC Chair, was highly critical of removing the ADA notice requirement. She referred to the ADA notice as “informed consent” during the June 11, 2020 meeting, stating that an employee’s decision to participate in a health screening cannot be voluntary unless he or she knows exactly what they are agreeing to with regard to disclosure of their health information. The ADA notice describes who at the employer might see the information and why, and reminds employees that unless the employer has some role to play in administering the wellness program, the employer only sees information in the aggregate. The notice also describes how an employee’s information would be protected and why their information is being collected.
   
   Given her new leadership role, I would not be surprised if Commissioner Burrows insists that the ADA notice requirement remain intact.
2. Non-Group Health Plan Wellness Programs Must Limit Incentives to “De Minimis.” The proposed ADA and GINA rules define “de minimis” by providing examples of what qualifies as “de minimis” in the language of the rule: “water bottle or a gift card of modest value.” This guidance corresponds to the “de minimis” guidance offered by the IRS when determining if an incentive is subject to taxation. 26 USC § 132(a)(4). This means that a wellness program that incentivizes the collection of employee health information from all employees, regardless of whether the employee is enrolled in the company’s group health plan, would be limited to offering incentives with de minimis value only.
   
   Group health plan wellness programs that are also “health contingent” would be able to offer incentives in alignment with the HIPPA/ACA wellness incentive rules. A health contingent program would be one that provides an employee an incentive if they meet a certain health metric or activity goal. Under the proposed ADA rules, health contingent programs could impose an incentive of up to 30% of the total cost of health plan coverage (measured by both employee and employer contribution), or 50% of the total cost of coverage for tobacco cessation activities, in compliance with the Affordable Care Act (ACA) incentive rules. See 78 Fed. Reg. 33158 (June 3, 2013). The EEOC rules provide the following guidance to determine if your wellness program qualifies as a group health plan wellness program:
   
   
   1. The program is only offered to employees who are enrolled in an employer-sponsored health plan;
   2. The incentive is tied to cost-sharing or premium reductions (or increases) under the group health plan;
   3. The contract for wellness program services is between the wellness vendor and the group health plan or health insurance issuer; or
   4. The wellness program is a term of coverage under the group health plan.
   
   Thus, if your wellness program is tied to your group health plan and only incentivizes an employee once they meet certain health metrics, the proposed ADA rules would allow a much heftier incentive than if your wellness program merely incentivized employees for participating in a biometric screen or health risk assessment. The EEOC attributed the differential treatment between group health plan and non-group health plan wellness programs to the existence of the insurance safe harbor. As discussed below, the EEOC made some significant changes to its view of the insurance safe harbor compared to the 2016 ADA rules.
3. The Insurance Safe Harbor Returns. In the 2016 rules, the EEOC was adamant that the insurance “safe harbor” did not apply to wellness programs. The proposed rules would now allow the insurance safe harbor to apply health contingent, group health plan wellness programs. What this means is that health contingent, group health plan wellness programs would be able to offer more than de minimis incentives to collect employee health information. As illustrated above, a group health plan tobacco cessation program could incentivize employees up to 30% of the total cost of coverage if that employee met some wellness benchmark set by the employer.
   
   EEOC Chair Burrows was highly skeptical of the EEOC’s change in position on the applicability of the insurance safe harbor to wellness programs. She stated that allowing higher incentives for group health plan, health contingent wellness programs would penalize persons with disabilities for not being as well as other workers and make it even more difficult for people with disability to obtain employment on fair and equal terms. See June 11, 2020 EEOC Transcript at 7.
   
   Despite Commissioner Burrows’ objection, the EEOC explained that it had focused on the insurance safe harbor’s provision that allows group health plans to use data to “underwrite risks.” But, the EEOC had ignored the fact that the insurance safe harbor also applies when a group health plan uses employee health data for “classifying risks” or “administering risks.” Commissioner Burrows was not satisfied with that explanation, and stated at the June 11, 2020 meeting that allowing group health plan wellness programs to benefit from the insurance safe harbor would undermine the ADA’s requirement that disclosure of health information, including tobacco use screenings, must be voluntary. Id. at 9. Because of Commissioner Burrow’s strong objection, I would not be surprised if the EEOC returned to its original position of prohibiting the use of the ADA insurance safe harbor in any type of workplace wellness program.
4. Removal of the “Reasonably Designed” Requirement. Another requirement that was a nonissue in the AARP v. EEOC case was the requirement that any health information collection activity conducted by an employee wellness program must be reasonably designed to promote health or prevent disease. 29 § 1630.14(d)(1). In the preamble to the 2016 rules, the EEOC noted that “Programs consisting of a measurement, test, screening, or collection of health-related information without providing results, follow-up information, or advice designed to improve the health of participating employees would not be reasonably designed to promote health or prevent disease, unless the collected information actually is used to design a program that addresses at least a subset of conditions identified.” 81 Fed. Reg. at 3113 (May 17, 2016).
   
   The proposed ADA rule removes this requirement because the EEOC believes the de minimis incentive standard will make it unlikely that an employee will choose to participate in a program that requires providing medical information unless the employee believes the program has some value in promoting health or preventing disease. Proposed Rule at 8. The change effectively places the burden on employees to determine whether a wellness program is reasonably designed to promote health or prevent disease, rather than on the employer. The EEOC also notes that health contingent, group health plan wellness programs would still be subject to the ACA requirement that those programs must be reasonably designed to promote health or prevent disease. Id. However, participatory programs, whether group health plan or not, will no longer be required to ensure any health information collection activity is tied to a program reasonably designed to promote health or prevent disease.
5. De Minimis Incentives Only for Employees’ Children and Spouses, Even if Offered through a Group Health Plan Wellness Program. The proposed GINA rule would permit de minimis incentives to employee spouses and children. This is in sharp contrast to the previous rules which prohibited incentives to an employee’s children, no matter the age of the child, in exchange for that child’s manifestation of disease or disorder information. See 81 Fed. Reg. at 31147 (May 17, 2016).
   
   However, the de minimis incentive limit would apply to both non-group health plan wellness programs as well as group health plan wellness programs. This means that health contingent group health plan wellness programs that tie incentives to meeting a health metric could amount to 30% to 50% of the total cost of coverage for employees, but could only be de minimis incentives for employee family members. The EEOC reasons that unlike the ADA, which contains an insurance safe harbor, GINA Title II (the title of GINA that the EEOC enforces) does not. As a result, the EEOC is unable to justify allowing more than a de minimis incentive for employee family members, even if the wellness program is a group health plan, health contingent wellness program.

As a reminder, the above summaries are of proposed rules, not final rules. That means these rules do not have the force of law, and given the consequential changes at the EEOC since January 20, 2021, it is very likely that many of the proposed changes will not ever become law. Nevertheless, it is important to learn how the proposed rules might affect tobacco cessation programs; when the rules are finally published in the Federal Register, stakeholders will have a much easier time analyzing the impact of those rules and submitting meaningful comments to the EEOC.

¹ Assessing tobacco use status by asking employees if they use tobacco through a questionnaire or through an affidavit does not qualify as a disability-related inquiry subject to the ADA rule. 81 Fed. Reg. at 31136 (May 17, 2016).

Barbara J. Zabawa

President of the Center for Health and Wellness Law, LLC
wellnesslaw.com