These EEOC wellness rules kick in Jan. 1: Are your plans ready?
Jan. 1, 2017 may still seem pretty far off, but now’s the time to make sure you’ll be in compliance with the EEOC’s new wellness rules that kick in on New Year’s Day. Here’s why.
Health and wellness plans tend to go hand in hand. That means as you’re putting a bow on your health plan in preparation for open enrollment, it only makes sense to do the same for your wellness plan.
And in 2017, a slew of new rules will apply to company wellness plans — like new incentive limits regulations, a new notice requirement pertaining to health-related inquiries and a new definition of what’s “voluntary.”
The new rules, which were issued by the EEOC last spring, affect wellness programs that make medical inquiries and conduct medical exams — with perhaps the most common example being wellness plans that contain health risk assessments.
Complying with the ADA
Here’s the problem the new rules were meant to address: When the ADA was passed in 1990, it said it was permissible for employers to conduct medial inquiries and examinations of employees as part of “voluntary” “health programs” (a.k.a., wellness programs).
The problem was the terms “voluntary” and “health programs” were never clearly defined. The new rules do just that.
Here’s what employers need to know — and get into compliance with — now:
What’s ‘voluntary’?
The EEOC states a voluntary health/wellness program that includes medical inquiries and exams is one that:
- does not require participation
- does not deny access to health insurance or benefits to an employee for non-participation
- does not retaliate against, interfere with, coerce, intimidate, or threaten any employee who does not participate or fails to achieve certain health outcomes
- provides a notice that explains the medical information that will be obtained, how it will be used, who will receive it, and the restrictions on disclosure (see “Notice requirement” section below), and
- complies with the rule’s incentive limits (see “Incentive limits” section below).
What’s a ‘health program’?
An employee health program (i.e. wellness program) that includes medical inquiries and exams is one that must be reasonably designed to promote health or prevent disease.
For that to be the case, it must:
- have a reasonable chance of improving the health of, or preventing disease in, participating individuals
- not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease
- not exist merely to shift costs to employees based on their health
- not be used only to predict an employer’s future health costs
- use the health information collected from participants to provide follow-up information or advice to those participants or design a program that addresses at least some conditions identified, and
- not impose unreasonably intrusive procedures, an overly burdensome amount of time for participation, or significant costs related to medical exams on employees.
Incentive limits
To be classified as voluntary, the incentive limits health programs must abide by are:
- 30% of the total cost of the self-only version of the plan in which the employee is enrolled — when the employer requires the employee to be enrolled in a particular health plan in order to participate in the wellness program
- 30% of the lowest cost major medical self-only plan the employer offers — when the employer offers more than one self-only health plan and does not require the employee to be enrolled in a particular health plan to participate in the wellness program, and
- 30% of the total cost to a 40-year-old non-smoker purchasing self-only coverage under the second-lowest-cost silver plan available on the state or federal exchange in the location that the employer identifies as its principal place of business — when the employer does not offer a health plan, but offers a wellness program that is open to employees.
(Note: The ACA’s incentive limit for programs designed to prevent or reduce tobacco use of 50% of the total cost self-coverage is still in place. However, that higher incentive limit can only be applied to such programs that do not include medical inquiries and/or exams).
Notice requirement
To ensure employees’ participation in a health program is voluntary, the final rule has added a new notice requirement for employers.
In a nutshell, the EEOC says that the notice must clearly explain:
- what medical info will be obtained
- how the info will be used
- who will receive the info, and
- an explanation of disclosure protections.
The EEOC’s sample notice is one employers can copy and use to satisfy the requirement. It’s rather lengthy, so you’ll want to click here to read it.
You’ll also want to take note of the areas in brackets — [space for company-specific info] — that the agency has left blank for you to fill out. But, for the most part, it’s a plug-and-play document.
In a separate document, the EEOC answers some key questions about the notice requirement.
Some of the answers worth noting are:
- If an employer already provides a notice under HIPAA, does it need to issue this wellness notice? Not if the HIPAA notice provides all of the info required under the final wellness rule.
- Can a third-party provide the notice? Yes, but the employer will ultimately be the one held responsible for making sure it’s issued.
- Must the notice include the exact wording in the EEOC sample? No. As long as the notice tells employees, in a language they can understand, what info will be collected, how it will be used, who will receive it and how it will be kept confidential, the notice is sufficient.
- When should employees get the notice? The requirement kicks in on the first day of the plan year that begins on or after Jan. 1, 2017 for the health plan the employer uses to calculate the incentive. However, the rule doesn’t require employees to get the notice at a particular time. But they must receive it before providing any info and with enough time to decide whether to participate in the wellness plan.
- Do employees have to sign the notice? No. Signed authorization or acknowledgement of recipient isn’t required.
- In what format can the notice be provided? Any format that will be effective in reaching employees being asked to participate in the wellness plan is sufficient. It may be provided in hard copy or as part of an email sent to all employees with a subject line that clearly identifies what information is being communicated. But be careful not to issue the notice with a lot of other wellness info that may cause employees to ignore or misunderstand the contents of the notice.
- What notice must an employer provide to a spouse? Under GINA, employers are required to obtain prior, knowing, written and voluntary authorization from a spouse before requesting current or past health status info in relation to a program that offers health or genetic services.
Applicability date
The final rule applies as of the first day of the first plan year that begins on or after Jan. 1, 2017 for the health plan used to determine the level of incentives permitted under the rule.
Example: If the plan used to calculate the incentive limit begins on Jan. 1, 2017, that’s when the final rule’s incentive and notice provisions kick in. If the plan used to calculate the incentive limit begins March 1, 2017, that’s when the rule’s provisions kick in.
