Wellness Program Rules - Impact from ADA and GINA

Until recently, Employers have had guidance from the U.S. Department of Labor on the HIPAA nondiscrimination rules but have not known for sure if they were meeting all the requirements of the ADA and GINA concerning wellness programs.

The final regulations, issued in May of 2016 by the Equal Employment Opportunity Commission, EEOC, have outlined ADA and GINA rules concerning required notices and maximum incentives making them effective as of the first day of the first plan year that begins on or after January 1, 2017.  The remaining portions of the final EEOC rules are considered to be clarifications of existing obligations and are now in effect.  For the most part The EEOC’s final rules are very similar to the proposed rules released in April of 2015.

The EEOC rules prohibit employers from obtaining and using information about employees’ or their family members’ health conditions, unless the employer is providing health or genetic services as part of a confidential and voluntary wellness program.  Therefore, wellness programs involving the use of Health Risk Assessments, HRAs, medical exams, and/or biometric screenings must meet the voluntary and confidentiality requirements outlined by these rules.

A program is considered voluntary as long as an employer does not:

  • Require employees or their families to participate.
  • Deny health coverage or limit the extent of coverage to employees or their families for non-participation.
  • Retaliate against, interfere with, coerce, or threaten employees or their families for not participating or reaching a certain health outcome.

And confidential as long as:

  • An employer that offers an HRA or medical exam must provide a notice explaining what medical information is collected, how it will be used, restrictions on disclosure of the information, who will receive it, and the methods that will be used to protect it.  The EEOC has provided a Sample Notice.
  • The person completing the medical exam or HRA must provide knowing and voluntary written authorization.
  • Medical information is to be disclosed to an employer only in aggregate form, except to the extent necessary to administer the health plan.

In addition, a recent IRS Memo offers insight on the IRS’ position on the proper tax treatment of wellness program benefits.  The memo outlines their position that certain cash and non-cash incentives, payments and rewards paid to an employee may not be excludable from an employee’s taxable income simply because they are paid as outlined by an employer wellness program.