EEOC Issues Proposed Wellness Plan Guidelines

Nearly a decade ago I spoke privately with senior Equal Employment Opportunity officials and then Senator Tom Harkin’s staff about the tension between the Agency’s position on the Americans with Disabilities Act (ADA) and employer wellness plans. I was concerned about my clients’ potential legal exposure associated with wellness incentives. Senator Harkin’s staff arranged for the meeting. Senator Harkin was the senior Iowa senator and an original sponsor of the ADA. The senator and his staff were very proud of the ADA and very supportive of employer efforts to support wellness and control spiraling health insurance costs. I was assured that the EEOC supports wellness incentives; I was also warned that the EEOC “will not shirk its duty to protect disabled individuals.” Since that time, we have been waiting for an effective legislative or regulatory compromise that threads the needle by encouraging robust wellness incentive plans while protecting disabled employees. We are still waiting.

After the meeting with the EEOC, Nyemaster warned our clients of the potential risk of disability discrimination claims arising from wellness plan incentives. Although some members of the Iowa legal community opined that we were exaggerating the threat, our concerns turned out to be legitimate. In fact, the EEOC and private litigants began filing discrimination suits within the year following our meeting.

 On January 7, 2021 the U.S. Equal Employment Opportunity Commission announced proposed rules on wellness plans under the Americans with Disabilities Act. The proposed rules do not solve the problem.

The ADAAA generally prohibits employers from requiring medical examinations except as expressly allowed by the statute. The EEOC interprets the ADAAA to permit employers to conduct voluntary medical examinations and inquiries as part of an employee health program (such as medical screening for high blood pressure, weight controls, and cancer detection), provided that participation in the program is voluntary, information obtained is maintained according to the confidentiality requirements of the ADA and this information is not used to discriminate against employees.

Although the Genetic Information Nondiscrimination Act (GINA) and Health Insurance Portability Accountability Act (HIPAA) provide very specific guidelines concerning allowable incentives to encourage participation in certain types of wellness programs, the ADA requires only that the programs be “voluntary.” Over the last decade the EEOC has sued and been sued as a result of the ambiguity. The Agency outlines its travails in its announcement of the new proposed rulemaking.

The court has addressed this matter in a very practical manner. The court reasoned that wellness incentives could not change the nature of a “voluntary” wellness plan. The court noted that “even a strong incentive is no more than an incentive; it is not compulsion.” United States v. Martinez-Salazar, 528 U.S. 304 (2000).

Despite this compelling logic, the EEOC once again plans to issue rules that outlaw most incentives in health insurance plans. Essentially, anything other than a “de minimis” reward would create risk. As one health insurance industry veteran describes it, “it looks like we can provide a water bottle but not a [somewhat costly name brand insulated beverage cup].”

There is a simple legislative solution to the conundrum. The ADA could be amended to include a wellness plan safe harbor. The safe harbor could mirror the twenty percent safe harbor found in HIPAA. We suggested that solution a decade ago. We are still waiting. 

The public can provide comments in the proposed rule for 60 days. We at Nyemaster will monitor developments in this area. In the meantime, we are available to discuss the conflict between GINA, HIPAA, the ADA…and common sense.