Final Regulations for Wellness Plans Limit Incentives at 30%

The U.S. Equal Employment Opportunity Commission has released final regulations for employer-sponsored wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act.
The final rules take effect at the start of 2017 and affect all wellness plans for employees and their family members, even those plans that don’t also require enrollment in a health plan.

The final rules cover:
• The amount and type of incentives employers can offer.
• Notice requirements.
• The definition of voluntary.
• Protection of medical information that the plans collect.

Here we look at the new rules:

Under the final regulations, employers can offer up to a 30% discount on self-only coverage to employees that participate in wellness plans. This final regulation actually conflicts with the Affordable Care Act, which stipulates maximum incentives of 30% of the cost of coverage that the employee is enrolled in.
This means that if you offer your employees more than one health care plan, the incentive cannot exceed 30% of the cost of the lowest-priced option.
The final rules also limit spousal incentives to 30% of employee-only coverage.
Under Health Insurance Portability and Accountability Act (HIPAA) regulations, incentives for a wellness program with a smoking-cessation component are not limited to the 30% rule and can be as high as 50%. However, if the program includes biometric screening or any other tests for the presence of nicotine or tobacco, it would be limited to incentives of 30%.
In addition to financial incentives, employers are permitted to offer in-kind incentives (e.g., employee recognition, parking spot use, relaxed dress code).

‘Voluntary’ defined
The final regulations define what is considered “voluntary”:
• Employers must not require employees to participate.
• Employers may not deny health care coverage to employees who do not participate.
• Employers may not take any adverse employment action against or coerce employees who do not participate.

Employers must provide employees with a notice written in plain language that advises them about what medical information will be obtained through the wellness program, how it will be used and restrictions on its use.

Confidentiality and information protection
Information obtained under employee wellness programs is still considered protected health information for purposes of HIPAA compliance.
It is important to ensure that all information is kept confidential and that employees handling the information are well trained on their confidentiality obligations. Employers also must ensure that they do not receive the information in a manner that would disclose the identity of specific individuals.

To ensure that this exception applies, the program must be “reasonably designed to promote health or prevent disease.”
For example, programs that penalize an individual because his or her spouse suffers from a disease or disorder will not meet this standard.
Information collected under the program must actually be used to design services that address the conditions identified in the information collected.
The ADA prohibits an employer from denying access to a particular health plan because an employee does not answer disability-related questions or undergo medical examinations, the EEOC said in a statement.
Under new ADA regulations, employers must offer reasonable accommodations to allow an employee to participate in a wellness program so long as doing so does not constitute an undue burden.
In addition, where an employer’s wellness program provides medical care and rewards an individual for meeting a health standard, the employer must provide a reasonable alternative to earning any financial incentive.
For example, a wellness program that rewards an employee for reaching a certain body mass index must modify that standard for any employee who cannot reach that BMI for medical reasons, such as a thyroid condition. That way the employee could still earn the financial incentive.

The takeaway
If you have a wellness program or are considering implementing one for your staff, you should talk to us about your options and discuss any concerns you may have regarding compliance with the new regulations.

wellness for health_400x180px