The EEOC proposed rule spells out and limits how employers can use incentives or penalties to encourage employees to participate in workplace wellness programs.

EEOC Publishes Major Rule on Wellness Incentives

The proposed rule says an employer may offer incentives up to a maximum of 30 percent of the total cost of employee-only coverage, "whether in the form of a reward or penalty," to promote an employee's participation in a wellness program that includes disability-related inquiries or medical examinations, as long as participation is voluntary.

The U.S. Equal Employment Opportunity Commission has published a Notice of Proposed Rulemaking on April 20 describing how Title I of the Americans with Disabilities Act applies to employer wellness programs that are part of group health plans. Members of the public have until June 19 to submit comments about it.

The key point in the proposed rule is that it clarifies how employers may use incentives or penalties to encourage their workers' participation in wellness programs. It says an employer may offer incentives up to a maximum of 30 percent of the total cost of employee-only coverage, "whether in the form of a reward or penalty," to promote an employee's participation in a wellness program that includes disability-related inquiries or medical examinations, as long as participation is voluntary.

EEOC's description of the rule states that it will provide much-needed guidance about how wellness programs offered as part of an employer's group health plan can comply with the ADA, consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act (HIPAA) as amended by the Affordable Care Act. EEOC also is publishing a fact sheet for small businesses and a Q&A document for the general public.

"The EEOC worked closely with the Departments of Labor, Health and Human Services, and Treasury in developing this NPRM to harmonize the ADA's requirement that medical inquiries and exams that are part of an employee health program must be voluntary and HIPAA's goal of allowing incentives to encourage participation in wellness programs," said EEOC Chair Jenny R. Yang.

Although the ADA limits the circumstances where employers may ask employees about their health or require them to undergo medical examinations, it allows such inquiries and exams if they are voluntary and part of an employee health program. The proposed rule requires that if an employee health program seeks information about employee health or medical examinations, the program must be reasonably likely to promote health or prevent disease. Employees may not be required to participate in a wellness program and may not be denied health coverage or disciplined if they refuse to participate.

A footnote in the rule cites a Kaiser Survey that found 68 percent of all large firms that did offer an incentive for the completion of a wellness program used a maximum incentive below $500.

EEOC is seeking comments on whether additional protections for low-income employees are needed.

To ensure that participation in a wellness program that includes disability-related inquiries and/or medical examinations, and that is part of a group health plan is truly voluntary, "an employer must provide a notice that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the covered entity will employ to prevent improper disclosure of the medical information," the rule states. And the rule allows the disclosure of medical information obtained by wellness programs to employers only in aggregate form, except as needed to administer the health plan.

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