Wellness Woes (article)
Like autumn in many parts of the country, the wellness landscape continues to evolve.
On the eve of the applicability date for the EEOC’s ADA and GINA wellness rules, which take effect for plan years beginning on or after January 1, 2017 (see Wellness and the ADA – More Guidance Issued, Benefit Beat, 7/7/16), yet another lawsuit has been filed. In a nutshell, the AARP challenge (AARP v. Equal Employment Opportunity Commission, U.S. District Court for the District of Columbia, No. 1:16-cv-02113) questions the voluntariness of the 30% penalty, arguing that it has a disparate impact on older workers since they would be the ones more likely to have health conditions that would need to be divulged through means of a health risk assessment and the like.
Further, a couple bills pending in Congress also challenge the wellness rules.
For wellness program design purposes, consideration must be given to the applicability of the current ACA-HIPAA rules, which have been in effect in some form for a while now; along with the ADA-GINA rules. Two of the primary differences between the ACA-HIPAA camp and the ADA-GINA camp involve the amount of the reward.
- The ADA-GINA rules only allow the reward to relate to single coverage even if the wellness program is available to the family whereas the ACA-HIPAA rules allow the reward to apply to the family composition to whom the wellness program is available.
- With regard to the amount of incentive, the ADA-GINA rules limit the reward to 30% in all instances in which health information is collected. By contrast, the 30% limitation under the ACA-HIPAA rules only apply if the reward is contingent, i.e., either outcome-based or requiring an activity.
The EEOC recently issued an Informal Letter (i.e., the Letter is not binding but indicates how the Agency is viewing matters) addressing three scenarios specific to incentives in wellness programs and the applicability of the final rules that may be helpful in understanding the use of incentives under the ADA-GINA rules.
- In the first scenario, the wellness program requires two activities that collect disability-related inquiries and medical exams; the third activity does not. The EEOC concluded that, in this situation, the 30% limitation only applies to the rewards available under the first two activities and not to the reward available under the third activity.
- In the second scenario, participants are required to accomplish three activities; six activities are available, two of which require disability-related inquiries and medical exams. It is possible to achieve the full reward by completing three activities that do not require disability-related inquiries and medical exams. In this situation, the EEOC concludes that the ADA-imposed 30% limit does not apply; however, it cautioned that the ACA-HIPAA limitation would apply if any of the activities elected were contingent.
- The third situation relates to which plan is used to determine the 30% limit when multiple health plans are offered and the incentive is only available to individuals enrolled in a health plan. In a nutshell, if multiple health plan options are available to employees, even if participation in the wellness program does not require participation in the health plan, it is the lowest cost health plan that must be used for purposes of the ADA calculation.
It is also important to remember that for purposes of the ADA-GINA rules, a reasonable accommodation must be made for anyone protected by the Americans with Disabilities Act.
All of the wellness challenges notwithstanding, employers should be prepared to comply with all of the myriad of changes.
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.