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EEOC Proposes Wellness Incentive Limits

On January 7, 2021, the Equal Employment Opportunity Commission (EEOC) has released a set of proposed rules (NPRMs) that would amend the incentives employers may offer to encourage participation in wellness programs that require disclosure of medical or genetic information without violating the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA).

Under the proposed rules, one addressing the ADA and the other addressing GINA, any employer-sponsored wellness programs that include disability or genetic information inquiries or medical exams would be allowed to offer no more than a de minimis incentive, such as a water bottle or a gift card of modest value.

According to interpretive guidance accompanying the proposed ADA rule, the following incentives would impermissibly exceed the de minimis standard:

  • Charging an employee who does not complete a health risk assessment an extra $50 per month for health insurance;
  • Paying for an employee’s annual gym membership; and
  • Rewarding an employee with airline tickets.

Wellness programs that do not include such inquiries or medical exams, such as those rewarding employees for attending a smoking cessation class or providing general health and educational information, would not be subject to the de minimis limit.

An exception would also apply to health-contingent wellness programs that are part of, or qualify as, group health plans under the insurance safe harbor. Insurers and benefit plan administrators may use information from health risk assessments and biometric screenings to require employees to satisfy a health-related outcome, such as achieving a certain blood pressure level, to receive an award or avoid a penalty under a qualifying group health plan. These incentives would not be subject to the de minimis limit but instead to limits contained in 2013 Health Insurance Portability and Accountability Act (HIPAA) regulations.

Factors that help determine if the insurance safe harbor exception applies include whether:

  • The program is only offered to employees enrolled in an employer-sponsored group health plan;
  • Any incentive offered is tied to cost-sharing or premium reductions under the group health plan;
  • The program is offered by a vendor that has contracted with the group health plan or insurer; and
  • The program is a term of coverage under the terms of a group health plan.

The NPRMs were cleared by the White House’s Office of Management and Budget and sent to the Federal Register for publication. The public will have 60 days to provide comments after publication, after which it is expected that Final Rules will be issued.

Next Steps for Employers

Until the EEOC issues Final Rules, employers should carefully consider the level of incentives they use with their wellness programs and confirm with their carrier whether the group health plan safe harbor would be applicable. Employers should also watch for any future developments related to the EEOC’s wellness rules.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.