Confused about Wellness Plan Incentives and New Regulations?
If you have a wellness plan, or you’re thinking about implementing one, you may be aware of recent activity around those plans — regulations proposed, a subsequent regulatory freeze, and even a lawsuit settlement that made some recent waves. What’s behind it all, and are there any implications for your wellness program?
Americans with Disabilities Act and Incentive Limits
The Americans with Disabilities Act (ADA) applies to wellness plans where there is a medical examination or a disability-related inquiry required for participation in the plan. Examples of medical examinations that implicate the ADA include biometric screenings and cotinine tests (to detect tobacco use). An example of a disability-related inquiry would include a health risk assessment.
One reason for the settlement mentioned above revolves around the Equal Employment Opportunity Commission’s (EEOC) final rule that came out in May of 2016 outlining incentive limits under the ADA for wellness programs that include a medical examination or a disability-related inquiry. That final rule was challenged by the AARP in October of 2016, resulting in the EEOC’s court-ordered removal of the portion of the final rule that established the incentive limits for a participatory wellness plan.
This change to the final rule resulted in a lot of confusion regarding what incentives, if any, would be allowable for a voluntary wellness program where the ADA is implicated. By removing the portion of the rule establishing the incentive limits, but not providing a new rule, the final rule now cites a provision that no longer exists. Confusing, right? To add to the confusion, to date, employers still do not have revised ADA wellness plan rules from the EEOC. There have been some false starts, but nothing that an employer can rely on.
While the EEOC sorts out its composition and unfinished work, the real challenge for employers is not so much an enforcement action by the EEOC, but instead is the risk of employee legal action challenging the voluntariness of incentivized wellness programs that include a medical examination or a disability-related inquiry.
As stated above, settlements concerning such legal challenges have made the news lately and it is not unheard of for a plan sponsor to receive a letter from a plaintiff’s attorney asking for more information about the employer’s wellness program.
Employer Wellness Plan Considerations
What does this all mean if you have or are considering a wellness plan that implicates the ADA?
Employers Currently with a Plan Implicating the ADA
The biggest is whether you’re comfortable with the current level of uncertainty surrounding what level of reward, if any, is permissible when determining whether a wellness plan is voluntary.
If you’re uncomfortable with the risk, you can redesign your wellness program to strip out medical exams and disability-related questions so that the ADA rules no longer apply, at least as far as incentive limits are concerned.
Here are a couple of examples of how this could work:
- If you have a smoking cessation program that requires a cotinine test, you could switch to an attestation process, removing the test, which is a medical exam.
- If you require employees to participate in a biometric screening through a certain vendor to receive a reward, you could instead require the employee to submit an attestation from their personal physician that they went in for an annual physical.
- Another option would be to still offer the biometric screening without offering any kind of reward.
Here’s the thing, though. You should always consult with your legal counsel to make sure that you are all comfortable with any risk as the situation with the EEOC and the final ADA wellness rules progresses.
Employers Not Currently with a Plan Implicating the ADA
If you do not have wellness plans that include medical examinations or disability-related inquiries, or if you’re in the process of designing a new wellness plan, the analysis is very similar.
Are you comfortable with implicating the ADA in your plan design and offering a wellness reward before more clarity is provided by the EEOC regarding what constitutes a voluntary wellness program?
If you want to wait for more clarity, there are other wellness plan designs that can be implemented while we wait for the EEOC’s guidance. Holmes Murphy’s clinical team can help you determine whether your wellness program still works for your employees, and we can design wellness programs that do not include a medical examination or a disability-related inquiry.
If you’re comfortable proceeding with a plan that contains ADA elements, you should still discuss your program with trusted legal counsel to make sure the risk (if counsel thinks there is a risk) continues to be acceptable to you.
Compliance with Legal Requirements
Compliance with the ADA is not the only consideration for an employer with a wellness program. You must also work to stay in compliance with areas of law such as HIPAA, GINA, and ERISA.
Not sure what that means or what to do? We have you covered. We are including two documents regarding the various legal requirements for wellness programs. Be sure to ask your legal counsel how these other compliance areas play into your wellness program.
We know the continued uncertainty for a plan you’re trying to offer as a path to wellbeing for your employees is unfortunate. However, understanding the issue, discussing the various factors involved with legal counsel, and designing an effective program according to your tolerance for risk are all steps you can take now to avoid, at the very least, the surprise of an employee lawsuit concerning your wellness plan.
Holmes Murphy can help! We have experts on hand who can walk you through all of this. All you have to do is reach out.
Published on: 06.20.22