The Affordable Care Act (ACA) encourages employers to boost participation in wellness programs by offering higher limits on incentives to employees who take part in these initiatives. At the same time, the federal government continues to discourage employers from doling out financial incentives in a discriminatory manner. Some employers do so by making it unduly hard or impossible for certain people to meaningfully participate in a wellness program.
To more closely enforce compliance, the Equal Employment Opportunity Commission (EEOC) recently finalized a pair of regulations that take effect on January 1, 2017. Even if your benefit plan year begins after the start of the calendar year, you’ll need to comply with these regs by the first of the year. So, assuming you offer a wellness program, it’s advisable to start studying up on them now.
The EEOC’s two regulatory packages interpret how two laws apply to wellness program incentives:
- The Americans with Disabilities Act (ADA), and
- The Genetic Information Nondiscrimination Act (GINA).
Some wellness programs have incentives that are contingent on employees performing a particular task or achieving a specific outcome, as opposed to simply participating. For example, participants might have to submit a health risk assessment or lose a particular amount of weight. These types of programs have already been covered by regulations under the Health Insurance Portability and Accountability Act (HIPAA), as modified by the ACA.
Under those ACA/HIPAA rules, when the wellness programs are offered in conjunction with health plans, incentive programs must:
- Satisfy employee notification requirements,
- Allow employees to try to re-qualify annually,
- Cap the incentive at 30% of the cost of health coverage (50% for smoking cessation programs), and
- Provide employees who have a health condition that impedes their satisfying standard program requirements a reasonable alternative way to do so.
Wellness programs offered independently of the health plan, or in conjunction with a health plan but that only require employees to participate without having to achieve any particular results, aren’t governed by the existing ACA/HIPAA regulations. But these programs are covered by the EEOC’s new ADA and GINA regulations — as are the kinds of wellness programs already covered by the ACA/HIPAA rules.
Zeroing in on data
The new ADA and GINA regulations zero in on programs that require employees to furnish health or genetic data via a health risk assessment, biometric screening or any other kind of medical exam. Although the new ADA and GINA regulations cover much of the same territory as the ACA/HIPAA rules, there are some differences.
One distinction deals with limits on the wellness incentive size. Under the ACA/HIPAA rules, the 30% (50% for smoking cessation) of health coverage cost cap is based on the cost of single coverage under the plan covering the employee — even if that particular plan is more expensive than other plans offered by the employer.
Also, if a spouse is covered by the wellness plan, and the spouse is covered under the health plan, the 30% limit is still based on the cost of that employee + spouse coverage, even though it will be higher than a single-only plan. The same principle applies for family plans.
In contrast, the ADA and GINA regulations are less generous. They limit the cost-of-coverage base to the cost of the least expensive single-only coverage, regardless of which plan the employee is actually enrolled in.
Additionally, the ADA regulations are more restrictive with respect to the 50% incentive ceiling for smoking cessation programs. Under the ACA/HIPAA rules, smoking cessation program participants can either:
- Be required to simply certify that they have quit smoking, or
- Be subjected to a medical test that would determine whether the individual has indeed given up the habit.
But under the new ADA rules, if the smoking cessation program participant must be subjected to medical testing, the incentive cap is lowered to 30%.
Closing the gateways
The ADA and GINA regs forbid employers from asking employees for health or genetic information unless they do so via a voluntary wellness program. This means employee participation in a wellness program must be voluntary in order for the employer to obtain health data. But what does “voluntary” mean?
One important definition is that employees cannot be penalized for not participating in a wellness program by losing eligibility to participate in the employer’s health plan. Denying an employee health plan coverage would violate the ACA anyway, but the EEOC wanted to make sure employers don’t try to chip away at this requirement with an approach called a “gateway plan.”
Typically, a gateway plan is an enhanced plan in which employees are, initially, enrolled automatically. (They might subsequently choose to switch to a less expensive, no-frills plan.) Under the new ADA regulations, employers cannot make participation in a wellness program a requirement for employees to remain in that original gateway plan.
Making the right changes
The January 1, 2017, effective date for the new ADA and GINA regulations set forth by the EEOC technically applies to only the explicit changes in the wellness incentive cap. Other matters addressed in the regs represent interpretations of existing law. So, in theory, they kicked in when the regulations were finalized on May 17.
We’ve discussed only some highlights of the EEOC regulations. Be sure to consult your benefits advisor to determine what compliance changes you may need to make to your wellness program.