eeoc wellness rules - ice miller llp...on april 20, 2015, the eeoc issued its long-awaited proposed...
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Ice on Fire Ice on Fire
Ryan McCabe Poor
Christopher S. Sears
(317) 236-2100
EEOC Wellness Rules June 29, 2015
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Health Insurance Portability and Accountability Act of
1996 (HIPAA)
Americans With Disabilities Act (ADA)
Genetic Information Nondiscrimination Act (GINA)
Internal Revenue Code
Anti-Discrimination Laws
Privacy Rights/Lifestyle Protection
Employee Retirement Income Security Act of 1974
(ERISA)
Health Care Reform (HCR)
Legal Requirements for Wellness Programs
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Why is the EEOC involved?
ADA prohibits discrimination based on disability.
Imposes strict confidentiality requirements on the disclosure of
medical information.
Limits the circumstances under which an employer may make
disability-related inquiries of employee or require the employee to
have a medical examination:
Disability related inquiry – any question that is likely to elicit
information about a disability [most health risk assessments]
Medical examination – procedure or test that seeks information about
physical or mental impairment or health [e.g., cholesterol testing or
blood pressure screening]
Legal Requirements for Wellness Programs
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Pre-employment?
Limits until post-offer, then OK
Post-employment?
Must be job-related and consistent with business necessity
Usually requires objective evidence and individualized analysis
Important Exception Under ADA: Disability-related inquiries and
medical exams are permitted under the ADA if they are made in the
context of a voluntary wellness program.
The EEOC takes the position that a wellness program is "voluntary"
so long as an employer does not:
require participation or
penalize nonparticipation
Americans With Disabilities Act (ADA)
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EEOC issued some informal, non-binding discussion
letters – not very clear guidance.
In 2014, the EEOC took aggressive stance on wellness
programs under the ADA, initiating lawsuits against three
employers even though the EEOC had not yet issued any
regulations on such programs:
EEOC v. Orion Energy Systems
EEOC v. Flambeau
EEOC v. Honeywell
EEOC Enforcement Actions
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EEOC took aggressive stance on wellness programs under the Americans with Disabilities Act
Orion Energy and Flambeau, Inc.: Programs required biometric and health risk assessment or face cancellation of insurance, payment of full premiums, and/or other discipline/firing
Honeywell
Starting in 2015, the biometric testing for Honeywell's employees and their spouses to be part of a screening to help identify health risks. It included checks for blood pressure, HDL and total cholesterol, nonfasting glucose levels, body mass index (BMI) and waist circumference. Blood also screened to determine whether the employee or spouse smokes tobacco.
Employees penalized (or lose incentives) if they or their spouses do not take the biometric tests, including the blood draw. Subject to:
A $500 surcharge applied to the employee’s medical plan costs.
A $1,000 “tobacco surcharge” even if the employee declines to participate in the biometric testing for reasons other than smoking (since, presumably, absence of tobacco can’t be verified).
An additional $1,000 “tobacco surcharge” if the employee's covered spouse does not submit to the testing, even if the spouse declines to participate for reasons other than smoking.
Loss of health savings account contributions from Honeywell, which range up to $1,500 depending on the employee’s annual base wage and type of coverage
Wellness Programs
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On April 20, 2015, the EEOC issued its long-
awaited proposed rule on wellness programs.
It generally tracks the HIPAA wellness rules, with
some important exceptions.
EEOC not yet effective, but EEOC has stated that it
is unlikely that a court or the EEOC would find an
ADA violation if an employer were following the
proposed rules.
Proposed rules has five essential requirements.
Wellness Programs – EEOC Proposed Rule
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First Element: Employee health program, including any disability-related inquiries or medical examinations that are part of such programs, must be reasonably designed to promote health or prevent disease.
Similar to HIPAA wellness rules requirements.
Program must have a reasonable chance of improving the health of, or preventing disease in, participating employees.
Program must not be overly burdensome.
Program must not be a subterfuge for violating the ADA or other laws preventing employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.
Wellness Programs – EEOC Proposed Rule
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Acceptable: Conducting an HRA and/or a biometric screening of employees for the purpose of alerting them to health risks of which they may have been unaware would meet this standard.
Acceptable: Use of aggregate information from employee HRAs by an employer to design and offer health programs aimed at specific conditions that are prevalent in the workplace would meet this standard.
Not Acceptable: Collecting medical information on a health questionnaire without providing employees follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design programs or treat any specific conditions would not be reasonably designed to promote health.
Not Acceptable: A program is not reasonably designed to promote health or prevent disease if it imposes, as a condition to obtaining a reward, an overly burdensome amount of time for participation, requires unreasonably intrusive procedures, or places significant costs related to medical examinations on employees. It is also not acceptable if the program exists mainly to shift costs from the covered entity to targeted employees based on their health.
Wellness Programs – EEOC Proposed Rule
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Second Element: The program must be voluntary.
Employee cannot be required to participate.
Employee cannot be denied coverage under any group
health plan or particular benefit packages within a group
health plan for non-participation, nor can benefits be
limited for employees who do not participate.
Employer cannot take any adverse employment action or
retaliate against, interfere with, coerce, intimidate, or
threaten employees for not participating.
Wellness Programs – EEOC Proposed Rule
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New Notice Requirement: Employer must provide employees a written notice that:
Is written so that the employee from whom medical information is being obtained is reasonably likely to understand it;
Describes the type of medical information that will be obtained and the specific purposes for which the medical information will be used; and
Describes the restrictions on the disclosure of the employee's medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the HIPAA Privacy Rule).
Wellness Programs – EEOC Proposed Rule
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Third Element: Incentives (financial or in-kind) must not exceed a 30 percent limit of the total cost of employee-only coverage.
Incentive can be in the form of a reward or a penalty.
All rewards for all wellness programs connected with the group health plan must be combined and may not exceed the 30 percent limit.
Limit applies to participatory or health-contingent programs, or any combination of the two.
This roughly aligns with the HIPAA wellness rule limits; however, HIPAA's allowance to extend the limit to 30 percent of the cost of family coverage if family members are eligible to participate is conspicuously absent from the EEOC regulations.
Wellness Programs – EEOC Proposed Rule
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Note that this would extend a financial limit to a HIPAA participatory program if the HIPAA participatory wellness program involves disability-related inquiries and/or medical examinations.
Not all participatory wellness programs require disability-related inquiries or medical examinations such as attending nutrition, weight loss, or smoking cessation classes. These kinds of participatory wellness programs would not be subject to the EEOC's limit on incentives.
This limit would not prevent employers from taking advantage of the HIPAA rules' allowance of a 50 percent incentive for tobacco-related wellness programs as long as the program did not involve disability-related inquiries or medical examinations.
Smoking cessation that merely asks employees whether or not they use tobacco (or whether or not they ceased using tobacco upon completion of the program) is not an employee health program that includes disability-related inquiries or a medical examination and could still utilize the HIPAA rules' allowance of an incentive up to 50 percent of the cost of the coverage.
A program that required employees to undergo a blood test or other medical examination to conclusively demonstrate the absence of tobacco use would involve a medical examination and would have to confine the reward to the 30 percent limit (even though HIPAA might have otherwise allowed an incentive of up to 50 percent).
Wellness Programs – EEOC Proposed Rule
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Fourth Element: Reasonable accommodations
must be provided, absent undue hardship, to
enable employees with disabilities to earn
whatever financial incentive an employer offers.
Similar to the HIPAA wellness rules' requirement to
provide a reasonable alternative for health-
contingent programs.
ADA would also require a reasonable
accommodation under a participatory wellness
program subject to the ADA.
Wellness Programs – EEOC Proposed Rule
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Examples.
An employer that offers a financial incentive to attend a nutrition class, regardless of whether employees reach a healthy weight as a result, would have to provide a sign language interpreter so that an employee who is deaf and who needs an interpreter to understand the information could earn the incentive (as long as providing the interpreter would not result in an undue hardship to the employer).
An employer would, absent undue hardship, have to provide written materials that are part of a wellness program in alternate format, such as in large print or on computer disk, for someone with a vision impairment.
An employer that offers a reward to completing a biometric screening that includes a blood draw would have to provide an alternative test so that an employee with a disability that makes drawing blood dangerous can participate and earn the incentive.
Wellness Programs – EEOC Proposed Rule
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Fifth Element: Confidentiality requirements must be observed.
In general, information obtained from disability-related inquiries and medical examinations may only be provided to an employer in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of an employee.
An exception exists for the administration of a health plan.
HIPAA Privacy Rule must be observed, which will generally ensure compliance with the ADA's confidentiality obligations.
Wellness Programs – EEOC Proposed Rule
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Participatory wellness programs – either:
None of the conditions for obtaining a reward is based on an
individual satisfying a standard related to a health factor; or
The program does not provide any reward.
Health-contingent wellness programs (two types):
"Activity-Only Wellness Program" – an individual is required
to perform or complete an activity relating to a health factor in
order to receive a reward.
"Outcome-Based Wellness Program" – an individual must
attain or maintain a specific health outcome in order to receive a
reward.
Types of HIPAA Wellness Programs
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Examples:
Program that reimburses employees for all or part of the cost of
membership to a fitness center
A diagnostic testing program that provides a reward for participation
and does not base any part of the reward on outcome
A program that provides a reward to employees for attending a monthly
no-cost health education seminar
Must be available to all similarly situated individuals, regardless of
health status.
Not subject to the remainder of the HIPAA Final Wellness
Regulations discussed in the presentation.
Participatory Wellness Programs
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5 Wellness Standards:
Reward limit
Reasonably designed
Available annually
Uniform availability and reasonable alternative standards
Disclosure requirement
Except where noted, the wellness standards are the same for both
activity-only wellness programs and outcome-based wellness
programs.
Outcome-based wellness programs are more strictly regulated
under the HIPAA Final Wellness Regulations to guard against
abuse.
Health-Contingent Wellness Programs
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Reward can be in the form of carrot or stick – receiving a benefit or
avoiding a penalty/surcharge
Examples of rewards:
Discount or rebate of a premium or contribution
Waiver of all or part of a cost-sharing mechanism (such as deductibles,
copayments, or coinsurance)
An additional benefit
Any other financial or other incentive
The absence of a surcharge or other financial or non-financial
disincentive.
Wellness Standard #1: Reward Limit
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Maximum reward:
General limit: 30% of the total cost of employee-only
coverage under the related health plan (employer
plus employee share).
Additional 20% (up to total of 50%) for reward tied to
smoking cessation program.
If spouses/dependents can participate, percentages
are applied against cost of total coverage in which
employee and spouse/dependents are enrolled.
Wellness Standard #1: Reward Limit (cont'd)
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"Reasonably designed" means that the program:
Has a reasonable chance of improving the health of or
preventing disease in participating individuals and it is not
overly burdensome.
Is not a subterfuge for discrimination based on a health factor.
Is not highly suspect in the method chosen to promote health or
prevent disease.
For outcome-based wellness programs only:
A reasonable alternative standard to qualify for the reward must
be provided to any individual who does not meet the initial
standard based on a measurement, test, or screening that is
related to a health factor (see Wellness Standard #4).
Wellness Standard #2: Reasonably Designed
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Program must give individuals eligible for the program the
opportunity to qualify for the reward under the program at least once
per year.
Standard encourages improvement of health over time and guards
against ongoing discrimination of unhealthy plan participants.
Wellness Standard #3: Available Annually
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Rules for Uniform Availability Standard:
Reward must be made available to all similarly
situated individuals.
Full reward must be available to those individuals
who qualify by satisfying a reasonable alternative
standard ("RAS") (even if alternative is not met until
some date after the plan year begins).
RAS can simply be the waiver of otherwise
applicable standard.
Wellness Standard #4: Uniform Availability and Reasonable Alternative Standards
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Rules for Uniform Availability Standard (cont'd)
If RAS is completion of an educational program, plan must
assist in finding program and pay for it
If RAS is diet program, plan must pay for program (not food)
Time commitment must be reasonable
If participant's personal physician states the plan standard is not
reasonable, plan must provide a RAS that accommodates the
recommendations of physician
Requirements for RAS differ depending on whether the
program is activity-only or outcome-based.
Wellness Standard #4: Uniform Availability and Reasonable Alternative Standards
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RAS Rules for Activity-Only Wellness Program
RAS must be provided to any individual if it is either:
Unreasonably difficult due to a medical condition to satisfy
standard or
Medically inadvisable to attempt to satisfy standard.
Plan may seek verification from participant's physician if
reasonable.
RAS need not be determined in advance, but must be offered
upon request.
Wellness Standard #4: Uniform Availability and Reasonable Alternative Standards
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RAS Rules for Outcome-Based Wellness Program
RAS must be provided to any individual who does not meet the
initial standard based on the measurement, test, or screening.
No requirement that failure be based on a medical condition.
If RAS is, itself, outcome-based:
RAS cannot be a requirement to meet a different level of the same
standard without additional time to comply (e.g., failure to achieve
BMI of 30 cannot require achievement of BMI of 31 on same day).
Individual must be given opportunity to comply with
recommendations of personal physician as a second RAS.
RAS need not be determined in advance, but must be offered
upon request.
Wellness Standard #4: Uniform Availability and Reasonable Alternative Standards
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All plan materials describing terms of program must disclose:
The availability of a reasonable alternative standard to qualify for the
reward.
Contact information for obtaining alternative reasonable standard.
A statement that the recommendation of an individual's personal
physician will be accommodated.
Sample language from HIPAA Final Wellness Regulations:
Wellness Standard #5: Disclosure Requirement
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Your health plan is committed to helping you achieve your best health.
Rewards for participating in a wellness program are available to all
employees. If you think you might be unable to meet a standard for a reward
under this wellness program, you might qualify for an opportunity to earn the
same reward by different means. Contact us at [insert contact information]
and we will work with you (and, if you wish, with your doctor) to find a
wellness program with the same reward that is right for you in light of your
health status.
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Evaluate health-contingent wellness programs under HIPAA final
wellness regulations.
Review all materials intended to communicate the program details
to ensure they include required disclosures related to reasonable
alternatives.
Consider how full reward will be provided to participants who take
longer to earn the reward under a reasonable alternative standard
(for example, will premiums be retroactively adjusted to reflect
wellness discount?).
Consider whether program will also require evaluation under ADA or
GINA (discussed next).
HIPAA Wellness Rules Takeaways
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GINA provides broad protections in employment and health benefits against
the improper collection, use, or disclosure of employees' genetic
information (includes family history).
Cannot tie a reward to any program that seeks family medical history
or genetic information (e.g., cash for completing an HRA questionnaire
that asks about family medical history).
Cannot collect genetic information prior to or in connection with
enrollment.
Cannot use genetic information to automatically enroll individual in a
disease management program.
Genetic information cannot be disclosed to employer, only individual or
health care provider.
Genetic Information Nondiscrimination Act (GINA)
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Do not request that employees provide family medical history before
enrollment, such as by completion of an HRA that seeks family medical
history.
Do not request any family medical history in connection with a program tied
to a reward.
If possible, eliminate all questions that relate to genetic information or family
medical history from any HRA or other screening tool provided to employees.
If genetic information or family medical history questions cannot be removed,
ensure the collection of such information is communicated as wholly voluntary
and not requested prior to enrollment.
Outsource administration of wellness programs, including collection of
individual medical information, to a third party and only accept results in the
aggregate.
GINA Takeaways for Wellness Programs
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Rewards are taxable unless specifically excepted from tax under a
provision of the Internal Revenue Code.
Tax-free rewards:
Premium reductions
Cost-sharing reductions (deductibles, coinsurance, copayments)
Contributions to FSAs, HRAs, or HSAs
Cafeteria plan flex credits
Taxable rewards:
Cash
Gift cards
Movie or other entertainment ticket
Airline points
Internal Revenue Code: Taxing Rewards
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Understand the tax treatment of rewards before they are issued.
If taxable, set up process for appropriate reporting and withholding,
as required.
If taxable rewards are provided by third party vendor, ensure vendor
contract addresses responsibility for applicable tax compliance.
Tax Takeaways for Wellness Programs
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Information collected through wellness program is protected health
information (PHI) under the HIPAA Privacy Rule.
Health plan may only use PHI for treatment, payment, and health care
operations without the individual's written consent.
Employers may not use PHI from health plan for employment related
decisions.
HIPAA Privacy implications for wellness programs:
Reviewing claims data
Health risk assessments
Notification of reward
Privacy Laws – HIPAA Privacy
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Make wellness program part of group health plan (health plan should
already have the built in protections for HIPAA privacy).
Use PHI for treatment, payment, and health care operations only.
Do not use PHI for employment related decisions.
Use PHI only minimally necessary in connection with wellness program.
Outsource administration of wellness programs, including collection of PHI,
to a third party and only accept results in the aggregate (aggregated data is
not PHI).
NOTE: compliance with HIPAA Privacy Rule will meet ADA confidentiality
requirements.
HIPAA Privacy Takeaways for Wellness Plans
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Some states protect any lawful off-duty conduct that does not conflict with
the employer's business interests (e.g., regarding tobacco use or personal
decisions about diet/nutrition).
Church plans do not enjoy ERISA preemption from such state laws, so the
scope of any such laws should be examined with respect to wellness
programs.
May impact the types or sizes of the reward/penalty that is permissible.
State Lifestyle Laws
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