The ADA allows for employers to create wellness programs and conduct medical inquiries/examinations as part of the voluntary program. HIPPA and ACA allow employers to offer incentives to employee to participate in these wellness programs.
In 2014 healthcare costs had increased significantly causing employers to become more aggressive with their wellness programs making it harder on those that did not participate. The EEOC started to audit the plans that punished employees too harshly for not participating. The new final rule sets the record straight as to what type of penalty for non-participating is not acceptable. Wellness programs are voluntary programs. The final rule clarifies the definition of voluntary.
The rule states that a voluntary health/wellness program that includes medical inquiries and exams is one that:
- does not require participation;
- does not deny access to health insurance or benefits to an employee for non-participation;
- does not retaliate against, interfere with, coerce, intimidate, or threaten any employee who does not participate or fails to achieve certain health outcomes;
- provides a notice that explains the medical information that will be obtained, how it will be used, who will receive it, and the restrictions on disclosure;
- and complies with the rule’s incentive limits.
The final rule also clarifies what a health program is. A health program is an employee wellness program that includes medical inquiries and exams which must be reasonable designed to promote health or prevent disease.
In order to meet these requirements, the program must:
- have a reasonable chance of improving the health of, or preventing disease in, participating individuals;
- not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease;
- not exist merely to shift costs to employees based on their health;
- not be used only to predict an employer’s future health costs;
- use the health information collected from participants to provide follow-up information or advise to those participants or design a program that addresses at least some conditions identified;
- and not impose unreasonably intrusive procedures, an overly burdensome amount of time for participation, or significant costs related to medical exams on employees.
In order for the wellness program to be classified as voluntary, the incentive limits health programs must abide by the following:
- 30% of the total cost of the self-only version of the plan in which the employee is enrolled – when the employer required the employee to be enrolled in a particular health plan in order to participate in the wellness program;
- 30% of the lowest cost major medical self-only plan the employer offers – when the employer offers more than one self-only health plan and does not require the employee to be enrolled in a particular health plan to participate in the wellness program;
- and 30% of the total cost to a 40 year old smoker purchasing self-only coverage under the second-lowest cost silver plan available on the state or federal exchange in the location that the employer identifies as its principal place of business – when the employer does not offer a health plan, but offers a wellness program that is open to employees.
Please note that the ACA’s incentive limit of 50% of the total cost self-coverage for programs that are designed to prevent or reduce tobacco use is still in place. However, this limit can only be applied to programs that do not include medical inquiries and/or exams.
Lastly, the final rules now required a notice be given to employees that explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosures. This final rule becomes effective the first day of the first plan year that begins on or after 1/1/2017 for the health plan used to determine the level of incentives permitted under the rule.