EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public. This letter is intended to provide an informal discussion of the noted issue and does not constitute an official opinion of the Commission.
ADA and GINA: Calculating Incentive Limits for Employer Wellness Programs
July 1, 2016
Via electronic mail
This letter responds to your request for clarification about the incentive limits that apply to wellness programs under Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA). You asked what incentive limit applies if an employer offers a group health plan with multiple benefit options (high, medium, and low medical options) and enrollment in any one of the options is required to participate in the wellness program. You also questioned whether the EEOC’s recently published final rules amending the ADA and GINA as they relate to employer wellness programs offer inconsistent answers to this question. As described in detail below, both the ADA and GINA rules provide that where an employer offers more than one group health plan but enrollment in a particular plan is not required to participate in a wellness program, the maximum incentive is based on the total cost of the lowest cost self-only coverage under a major medical group health plan that the employer offers. Although the ADA and GINA rules use slightly different language in describing how to calculate permissible incentives, the differences are not legally consequential.
Background on Title I of the ADA and Title II of GINA
The EEOC enforces the federal laws that prohibit employment discrimination, including Title I of the ADA, as amended, and Title II of GINA. See 42 U.S.C. §§ 12111-12117 and 42 U.S.C. § 2000ff. On May 17, 2016, the EEOC issued two final rules on employer wellness programs, one amending the ADA, 81 FR 31125, and one amending GINA, 81 FR 31143. These final rules explain that employers may offer limited incentives for employees and their spouses to provide health information as part of wellness programs, when certain requirements are met. Each rule explains how to calculate the permissible incentive limits in four situations: (1) where a wellness program is open only to employees (and, for GINA, spouses) enrolled in a particular group health plan; (2) where an employer offers only one group health plan, but enrollment in the plan is not required to participate in the wellness program; (3) where an employer offers more than one group health plan, but enrollment in a particular plan is not required to participate in the wellness program; and (4) where an employer does not offer a group health plan but does offer a wellness program.
Calculation of Incentive Limits
You describe a situation in which an employer that offers a group health plan with three major medical options – high, medium, and low – requires employees to enroll in one of these options in order to participate in a wellness program. The wellness program is the same regardless of the option in which an employee is enrolled. This situation is most closely aligned with the third method of calculating incentive limits referenced above. In the ADA rule, this incentive limit is “[t]hirty percent of the total cost of the lowest cost self-only coverage under a major medical group health plan where the covered entity offers more than one group health plan but participation in the wellness program is offered to employees whether or not they are enrolled in a particular plan.” See 29 C.F.R. § 1630.14(d)(3)(iii) (emphasis added). The GINA rule, at 29
C.F.R. § 1635.8(b)(2)(iii)(C), states that where an employee and spouse are given the opportunity to participate in an employer-sponsored wellness program, the inducement to each may not exceed: “[t]hirty percent of the total cost of the lowest cost self-only coverage under a major medical group health plan offered by the employer, if the employer offers more than one group health plan but enrollment in a particular plan is not a condition for participation in the wellness program” (emphasis added). We believe the meaning of both rules is clear: when an employer has more than one group health plan and enrollment in a particular plan is not required to participate in a wellness program that collects health information, the incentive limit is calculated using the total cost of the lowest cost self-only coverage under a major medical group health plan. This analysis applies when an employer offers a choice of benefit options through more than one group health plan or through multiple benefit options under a single group health plan, provided that participation in the wellness program is offered to employees whether or not they are enrolled in a particular plan or benefit option.
The result of this approach is that where an employer offers a wellness program that seeks health information from employees participating in different health plans (or in different benefit options within a plan), the incentive available to all employees is the same and does not depend on the plan (or benefit option within a plan) in which they happen to participate. Both rules promote consistency among incentive limits in other situations as well. For example, where an employer offers only one health plan or no health plan at all, the incentive limits for all employees participating in the wellness program are the same; the GINA rule makes the same incentives available for spouses and employees.
We realize that this outcome is different than what is permissible under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act. See 78 FR 33158 (June 3, 2013). The EEOC’s final rules on employer wellness programs seek to promote consistency, to the extent possible, with HIPAA, as amended by the Affordable Care Act, while ensuring that incentives are not so high as to become coercive. The rules do not, however, seek to incorporate the HIPAA nondiscrimination rules, including their limits on incentives, in all respects. For example, EEOC’s rule limits incentives for both participatory and health-contingent wellness programs, while HIPAA, as amended by the Affordable Care Act, limits incentive solely for health-contingent wellness programs. For a description of other differences between EEOC’s final rules on employer wellness programs and the wellness program rules under HIPAA, as amended by the Affordable Care Act, see EEOC’s Final Rule on Employer Wellness Programs and Title I of the Americans with Disabilities Act, Question 4 at https://www.eeoc.gov/laws/regulations/qanda-ada-wellness-final-rule.cfm.
We hope this information is helpful. Please note that this is an informal discussion of the issues you raised and does not constitute an official opinion of the EEOC. Please feel free to contact Acting Associate Legal Counsel Christopher Kuczynski at 202-663-4665, Senior Attorney Advisor Kerry Leibig at 202-663-4516, or Senior Attorney Advisor Joyce Walker-Jones at 202- 663-7031.
Peggy R. Mastroianni
This page was last modified on August 29, 2016.
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