CHA News Article

EEOC Issues Final Rule on Employer Wellness Programs

On May 16, the Equal Employment Opportunity Commission (EEOC) issued its final rule governing the treatment of wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), providing employers much-needed clarification on developing workplace wellness programs that comply with the acts. The final rule also provides guidance on compliance with applicable provisions of the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA).

The final rule generally tracks the version proposed last year. Unfortunately, the EEOC did not modify the rule to make it consistent with ACA regulations governing wellness programs, further complicating the task of designing compliant programs.

A major question that has arisen relates to the incentive payment an employer may offer for participation in a wellness program. In its frequently asked questions, the EEOC states that the new rule applies only to wellness programs that require employees to answer disability-related questions or undergo medical examinations to earn a reward or avoid a penalty. It would not apply, for example, to a wellness program that simply requires employees to engage in a certain activity — such as attending a nutrition or weight loss class or to walk a certain amount every week — to earn an incentive.

According to EEOC, “[i]f a wellness program is open only to employees enrolled in a particular plan, then the maximum allowable incentive an employer can offer is 30 percent of the total cost for self-only coverage of the plan in which the employee is enrolled.” If the wellness program is offered in the context of a variety of plans, or where no health insurance is offered, variations of the 30 percent rule are applied.

The new rule on financial incentives and penalties will apply to employer-sponsored wellness programs starting the first day of the first plan year that begins on or after Jan. 1, 2017. According to the EEOC, the rest of the provisions in the final regulations clarify existing obligations and apply both before and after the date of the final rules. Hospitals should closely review the new rule and modify their wellness programs as appropriate.