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: Applicability of Incentive Limits for Employer Wellness Programs
August 31, 2016
This is in response to your June 13, 2016 letter to the Office of Legal Counsel at the Equal Employment Opportunity Commission (EEOC or Commission) seeking clarification about the application of the EEOC’s recently published final rule on the Americans with Disabilities Act (ADA) and employer wellness programs. You have asked for guidance on two issues. First, you have asked how the incentive limitation applies to wellness programs that include disability-related inquiries and/or medical examinations, but do not condition a reward or penalty on an employee answering such questions or taking a medical exam. Second, you asked how an employer should apply the incentive limits where all employees are allowed to participate in a wellness program, but only those who enroll in a particular health plan are eligible to receive an incentive.
The EEOC enforces federal laws that prohibit employment discrimination, including Title I of the ADA, as amended, 42 U.S.C. §§ 12111—12117, and Title II of the Genetic Information Nondiscrimination Act (GINA), 42 U.S.C. § 2000ff. On May 17, 2016, the EEOC issued two final rules on employer wellness programs, one amending the regulations under the ADA at 29 C.F.R. § 1630.14(d), 81 FR 31125, and one amending the regulations under GINA, primarily at 29 C.F.R. § 1635.8(b)(2), 81 FR 31143. This letter discusses the ADA final rule, which is the focus of your inquiry, but we note that the same basic principles would apply under the GINA final rule where a wellness program offers incentives for an employee’s spouse to participate in the same types of wellness programs that you have described.
The ADA final rule addresses employer-sponsored wellness programs that include disability-related inquiries and/or medical examinations and explains that employee participation in these types of wellness programs must be voluntary. This means that employers may not require employees to participate in such programs, may not deny employees access to health coverage under any of their group health plans or particular benefits packages within a group health plan for non-participation, may not limit coverage under their health plan except to the extent the limitation may be the result of a permissible incentive, and may not take other adverse action against employees who choose not to answer disability-related inquiries or undergo medical exams. The final rule also requires that employees be provided with a notice that explains the medical information that will be obtained, how the information will be used, who will receive the medical information, restrictions on its disclosure, and the methods used to prevent improper disclosure.
Disability-related inquiries and medical exams that are part of a voluntary wellness program must be reasonably designed to promote health or prevent disease. The final rule states that a wellness program satisfies the reasonably designed standard if it has a reasonable chance of improving the health of, or preventing disease in, participating employees, and it is not overly burdensome, is not a subterfuge for violating the ADA or other laws prohibiting employment discrimination, and is not highly suspect in the method chosen to promote health or prevent disease.
The ADA final rule explains that employers are permitted to offer limited incentives for employees to provide health information as part of wellness programs, when certain requirements are met. The rule explains how to calculate the permissible incentive limits in four situations: (1) where a wellness program is open only to employees enrolled in a particular 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 has 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 offers a wellness program.
You provide two examples of wellness programs that include disability-related inquiries and/or medical exams, but do not require the completion of a disability-related inquiry and/or medical exam as a condition to obtain the incentive.
In your first example, you describe a wellness program that has three independent components, each of which is linked to a financial incentive. Components one and two contain disability-related inquiries and medical exams (i.e., a biometric screening and a “wellbeing assessment”), while component three does not contain any disability-related inquiries or medical exams (i.e., completing self-monitored and unreported exercise or diet journals). You ask whether the 30 percent limit applies to the third component if completion of the first two components is not required in order to receive the incentive for completion of the third.
As explained above, the ADA rule applies only to wellness programs or components of wellness programs that require employees to answer disability-related questions and/or to undergo medical examinations in order to earn a reward or avoid a penalty. It does not apply to a wellness program or components of a wellness program that simply require an employee to engage in an activity (such as attending a weight loss class) in order to earn an incentive.(1) Therefore, in the first wellness program that you have described, an additional incentive for completion of the third component is permitted (even if the total incentive available for completion of the three components would exceed the 30 percent limit), since completion of the third component does not entail any disability-related inquiries and/or medical exams and completion of the first two components is not a requirement to earn the incentive for completion of the third.
Your second example describes a wellness program that has six components, and employees may complete any three of the six components to obtain an incentive. Employees may choose any three of the following components: walk 30 minutes per week; certify that the employee has viewed a video on stress reduction in the workplace; certify that the employee does not use tobacco products, or if the employee does use tobacco products, certify that he or she has completed a tobacco cessation program paid for by the employer; log calories consumed each week; complete a biometric screening; or complete a health risk assessment. You state that two of the six components contain disability-related inquiries and/or medical exams (i.e., the biometric screening and the health risk assessment). The amount of the financial incentive is the same regardless of which three components an employee chooses to complete. Accordingly, the employee may choose three components that do not contain any disability-related inquiries and/or medical exams, or the employee may select three components that include a combination of those without disability-related inquiries and/or medical exams and those with disability-related inquiries and/or medical exams. In either case, the employee can earn the maximum available incentive.
It does not appear that the limitation on incentives in the ADA final rule would apply to the wellness program described above. In your second example, the employee may choose to provide medical information, but is not required to do so in order to obtain the incentive. Therefore, the incentive limits do not apply regardless of whether the employee selects components that contain disability-related inquiries and/or medical exams. The example described in your letter provides an employee who chooses to participate in the wellness program with several reasonable alternatives that do not require the completion of disability-related inquiries and/or medical exams. In addition, these alternatives do not appear to be overly burdensome and provide the same financial incentives that an employee would receive for completing the components that include disability-related inquiries and/or medical exams.
However, if a charge is filed challenging a program similar to the one you describe, the Commission would consider all of the facts and circumstances to determine whether the program is reasonably designed to promote health and prevent disease. Some factors that the Commission would consider in reviewing such a charge might include, but would not be limited to, differences between the amount of incentive offered to employees who choose to complete the components that do not include disability-related inquiries and/or medical exams with those who do; differences between the amount of time required to complete the components that do not include disability-related inquiries and/or medical exams with those that do; and differences between the cost associated with completing the components that do not include disability-related inquiries and/or medical exams with those that do.
Additionally, an employer must make a reasonable accommodation for an individual with a disability who wants to earn the available incentives by completing only those components that do not require disability-related inquiries and medical examinations. For example, if an employee who is deaf wants to earn an incentive by attending a nutrition class instead of completing a health risk assessment but needs a sign language interpreter to do so, the employer must provide one or, if providing an interpreter would impose an undue hardship, must provide an alternative to taking the class that would not require the employee to take the health risk assessment. Similarly, an employee with a mobility impairment who cannot fulfill a requirement to walk half an hour a day in order to earn an incentive but who does not want to complete a biometric screen as an alternative means of earning the incentive must be given a reasonable accommodation.(2)
Next, you describe a situation in which an employer permits all employees, regardless of enrollment in a health plan, to participate in the wellness program. However, only those employees enrolled in a health plan are eligible to receive the incentive. We agree that an employer may limit wellness program incentives to employees in an employer health plan, while allowing employees who are not enrolled in a health plan to participate in the same wellness program activities without receiving an incentive. However, the particular provision in the final rule used to calculate wellness program incentives does not depend on whether employees who are not enrolled in an employer health plan are eligible to receive the incentive. Rather, it depends on whether the employer limits the incentive to employees in a particular health plan or health plan option or, instead, makes incentives available to employees in more than one health plan or plan option.
Where an employer offers only one health plan, then you are correct that section 1630.14(d)(3)(i) may be used to calculate the incentive limit. Section 1630.14(d)(3)(ii) may also be used, but will result in the same incentive limit. However, where an employer offers more than one health plan or plan option and incentives are limited to employees participating in one of those plans or plan options, but not a particular one, the third method of calculating incentive limits in section 1630.14(d)(3)(iii) must be used to calculate the incentive limit. 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.” 29 C.F.R. § 1630.14(d)(3)(iii) (emphasis added). 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 plan options without regard to the plan in which the employees participate, the incentive available to all employees is the same and does not depend on the plan or plan option in which they happen to participate.
We hope that this information is helpful. Please note that this is an informal discussion of the issues you raised and should not be considered an official opinion of the EEOC. If you have further questions, please contact me at (202) 663-4665 or Attorney Advisor Ashley Martin at (202) 663-4695.
Christopher J. Kuczynski
Acting Associate Legal Counsel
1 However, as explained in the next section concerning Wellness Program 2, the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Patient Protection and Affordable Care Act (ACA), does place limits on incentives for engaging in activities that constitute health-contingent wellness programs, even if they include no disability-related questions or medical examinations. See note 2, infra.
2 Although a wellness program that does not require the completion of disability-related inquiries and/or medical exams in order to earn an incentive is not subject to the ADA incentive limit rules discussed here, wellness programs that qualify as health-contingent, like this activity-only health-contingent example (walking for a half an hour a day), are subject to other provisions of applicable law, including HIPAA and the ACA, which are administered by the Departments of Labor, the Treasury, and Health and Human Services (referred to collectively as “the tri-Departments”). HIPAA and the ACA require, among other things, that health-contingent activity-only wellness programs provide reasonable alternative standards (or waivers) for an individual to qualify for a reward for an individual for whom it is unreasonably difficult due to a medical condition to satisfy the standard and for any individual for whom it is medically inadvisable to attempt to satisfy the standard. See 26 CFR 54.9802-1(f)(3); 29 CFR 2590.702(f)(3); 45 CFR 146.121(f)(3). The tri-Departments have reviewed this letter and have advised that, with respect to the wellness program described in the second example, under the HIPAA and ACA nondiscrimination provisions, if any component of the wellness program is health-contingent, the wellness program is required to satisfy the criteria for health-contingent wellness programs, including the limitation on the size of the reward. That is, under HIPAA and the ACA, the fact that a reasonable alternative standard that would, on its own, not constitute a health-contingent wellness program is presented among a menu of wellness options does not exempt a plan or issuer from the separate requirement that the reward is limited. For more information, contact the Department of Labor’s Employee Benefits Security Administration electronically at www.askebsa.dol.gov or call toll free at 1-866-444-3272. Additionally, although Title II of GINA does not apply to wellness programs that make inducements available in exchange for an employee’s spouse’s engaging in certain activities if the activities do not require obtaining information about the spouse’s current or past health status, under HIPAA and the ACA, an employer may be required to provide a reasonable alternative standard for an employee’s spouse in connection with an activity-based health-contingent wellness program. See 29 C.F.R. § 1635.8(b)(2), 81 FR 31143. Title I of GINA also contains additional protections against discrimination by group health plans and health insurance issuers based on genetic information. GINA title I is administered by the tri-Departments. More information on Title I of GINA can be found at https://www.dol.gov//ebsa/faqs/faq-gina.html.
This page was last modified on October 13, 2016.
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