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On 4/16/15, the Equal Employment Opportunity Commission (EEOC) issued proposed regulations on the use of physical examinations in employee wellness programs. The proposed rule aims to provide guidance to employers on how to ensure their wellness programs comply with the Americans with Disabilities Act (ADA).

 

Details

The ADA prohibits employers from making disability-related inquiries or requiring medical examinations that are not job related and consistent with business necessity. However, the statute allows for voluntary medical examinations that are part of an employee wellness program. Employee wellness programs often include medical examinations such a biometric screenings and personal health assessments as a form of preventative care and it is common for employers to offer incentives to employees who participate in such examinations. Incentives may range from prizes and perks to a discount in health care premiums. Therefore, this leads to the question of when is the incentive to participate in a medical examination so large that it essentially penalizes those who do not participate and is thereby deemed involuntary? This is an issue that employers have struggled with and the goal of the EEOC’s proposed regulations is to provide much needed guidance in this area.

Maximum Incentive of 30%

The proposed regulations clarify that employers may offer a maximum incentive of 30% of the total cost of an employee-only health plan for participation in a wellness program that is part of a group plan and includes disability-related inquiries or medical examinations, so long as participation is voluntary. However, wellness programs that include smoking cessation components that do not include medical examinations or inquiries, but simply ask employees whether or not they use tobacco may offer incentives of up to 50% of the total cost of the employee-only health plan.

Definition of “Voluntary”

The proposed rule defines “voluntary” as:

  1. Employees are not required to participate in the program;
  2. Employees are not denied coverage under any of the employer’s group health plans or denied particular benefits packages within a group health plan, and employers may not limit the extent of such coverage if the employee opts not to participate in the program; and
  3. The employer may not take any adverse action or retaliate against, interfere with, coerce, or intimidate employees who do not participate in wellness programs or who do not achieve certain health outcomes.

Notice Requirement

Employers are required to provide a notice to employees describing what medical information will be obtained, how it will be used, who will receive the information, restrictions on the disclosure of the information, and the methods the employer uses to prevent improper disclosure of the information.

Information Presented in Aggregate Form

In order to protect employee privacy and maintain confidentiality of the medical information, any information obtained through an employee wellness program must be provided to employers in aggregate form, such that the identity of specific individuals participating in the program is not disclosed.

Reasonable Design

All employee wellness programs must be reasonably designed to promote health or prevent disease, meaning that they must be aimed at improving the health of employees and may not be overly burdensome.

 

Action Items

Employers are encouraged to review the proposed rule and provide their comments to the EEOC. Comments will be accepted until 6/19/15. If the proposed rules are made final, employers will need to review their wellness programs, if any, to ensure that they meet the new requirements and restrictions.

 

Additional Resources

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

 

Bonnie Mangels – Bonnie is the Corporate Counsel and Senior Compliance Manager for Sequoia. When not inundated in paperwork and legal briefs, her interests include arts and crafts, bunnies, and the Bay Area.