Many employers who provide health coverage to their employees have initiated wellness programs within the workplace over the years in order to reduce health care costs.  These wellness programs may include initiatives to motivate an employee to become healthier through exercise, weight loss, nutrition and smoking cessation, among other vehicles.  These programs may also include medical examinations and biometric screenings which measure an employee’s health risk factors.  Often there are incentives to participate in these programs in the form of discounts on health care premiums.

 When implementing these wellness programs, employers must still comply with federal, state and local anti-discrimination laws.  For example, the Americans with Disabilities Act (ADA) restricts the medical information employers may obtain from applicants and employees.  It also prohibits discrimination against a qualified individual with a disability who can perform the essential functions of the job with or without reasonable accommodation.

On April 20, 2015, the Equal Employment Opportunity Commission (“EEOC”) – the  entity which enforces compliance with the federal discrimination laws – issued proposed guidance attempting to clarify its interpretation of wellness programs under the ADA. This guidance specifically addresses how the agency feels employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations – and how/when they cannotuse such incentives.  Let’s detail some of the key points in the guidance.

First, while the EEOC permits wellness programs if they are voluntary, any programs which penalize employees through discipline, termination or cancellation of health coverage will be viewed – under the proposed Guidance – as involuntary and a violation of the ADA.  If the total allowable incentive does not exceed 30% of the total cost of employee-only coverage, a program will not be considered involuntary.  The limits are meant to ensure that the incentives are not too high, which might otherwise render participation in the program involuntary.

Second, according to the proposed Guidance, disability-related inquiries and medical examinations done in connection with wellness programs must be reasonably designed to promote health or prevent disease.

Employers would have other rules to follow under the Guidance, as well.  For instance, employers would not be able to deny coverage under its group health plans or benefits packages within a group health plan, limit the extent of such coverage, or take any other adverse actions against employees who refuse to participate in the wellness program or who fail to achieve certain health results.

Further, under the Guidance, an employer must provide notice to the employee explaining what information will be obtained, how the medical information will be used, who will receive the information, and how the employer will prevent improper disclosure of the medical information.

Finally, employers must also provide reasonable accommodations to enable employees with disabilities to participate in the wellness program, according to the Guidance.  Obviously, any wellness program cannot discriminate on the basis of race, sex, national origin or age or other protected classes.

Employers who have feedback to offer the Commission on their proposed wellness rules can offer their input to the agency on or before June 19, 2015.  At some point thereafter, once the EEOC considers the comments received and decides whether or not any amendments to the proposed Guidance is necessary, it will finalize the rules and publish them to be effective on a date certain.

Clarification in this area is something employers have been waiting on for a long time, and the urgency for the agency to release Guidance on wellness programs has grown over the last year as employers have increasingly developed these programs to take advantage of health cost discounts provided by the Affordable Care Act at the same time the EEOC has actually initiated litigation against certain employers claiming their programs aren’t voluntary.  The Commission’s proposed Guidance is the first step towards finally giving employers a greater understanding on what they legally can and cannot do in developing and implementing these programs.