eeoc wellness rules - ice miller llp...on april 20, 2015, the eeoc issued its long-awaited proposed...

Ice on Fire Ice on Fire

Ryan McCabe Poor

Christopher S. Sears

(317) 236-2100

[email protected]

[email protected]

EEOC Wellness Rules June 29, 2015

1

Before we get started...

• Having technical difficulties?

•Use the Q&A chat box to let us know OR email [email protected]

•To submit questions during the webinar, use the Q&A function. Questions will be

answered at the conclusion of the webinar.

mailto:[email protected]



Ice on Fire

Health Insurance Portability and Accountability Act of

1996 (HIPAA)

Americans With Disabilities Act (ADA)

Genetic Information Nondiscrimination Act (GINA)

Internal Revenue Code

Anti-Discrimination Laws

Privacy Rights/Lifestyle Protection

Employee Retirement Income Security Act of 1974

(ERISA)

Health Care Reform (HCR)

Legal Requirements for Wellness Programs

2

Ice on Fire

Why is the EEOC involved?

ADA prohibits discrimination based on disability.

Imposes strict confidentiality requirements on the disclosure of

medical information.

Limits the circumstances under which an employer may make

disability-related inquiries of employee or require the employee to

have a medical examination:

Disability related inquiry – any question that is likely to elicit

information about a disability [most health risk assessments]

Medical examination – procedure or test that seeks information about

physical or mental impairment or health [e.g., cholesterol testing or

blood pressure screening]

Legal Requirements for Wellness Programs

3

Ice on Fire

Pre-employment?

Limits until post-offer, then OK

Post-employment?

Must be job-related and consistent with business necessity

Usually requires objective evidence and individualized analysis

Important Exception Under ADA: Disability-related inquiries and

medical exams are permitted under the ADA if they are made in the

context of a voluntary wellness program.

The EEOC takes the position that a wellness program is "voluntary"

so long as an employer does not:

require participation or

penalize nonparticipation

Americans With Disabilities Act (ADA)

4

Ice on Fire

EEOC issued some informal, non-binding discussion

letters – not very clear guidance.

In 2014, the EEOC took aggressive stance on wellness

programs under the ADA, initiating lawsuits against three

employers even though the EEOC had not yet issued any

regulations on such programs:

EEOC v. Orion Energy Systems

EEOC v. Flambeau

EEOC v. Honeywell

EEOC Enforcement Actions

5

Ice on Fire

EEOC took aggressive stance on wellness programs under the Americans with Disabilities Act

Orion Energy and Flambeau, Inc.: Programs required biometric and health risk assessment or face cancellation of insurance, payment of full premiums, and/or other discipline/firing

Honeywell

Starting in 2015, the biometric testing for Honeywell's employees and their spouses to be part of a screening to help identify health risks. It included checks for blood pressure, HDL and total cholesterol, nonfasting glucose levels, body mass index (BMI) and waist circumference. Blood also screened to determine whether the employee or spouse smokes tobacco.

Employees penalized (or lose incentives) if they or their spouses do not take the biometric tests, including the blood draw. Subject to:

A $500 surcharge applied to the employee’s medical plan costs.

A $1,000 “tobacco surcharge” even if the employee declines to participate in the biometric testing for reasons other than smoking (since, presumably, absence of tobacco can’t be verified).

An additional $1,000 “tobacco surcharge” if the employee's covered spouse does not submit to the testing, even if the spouse declines to participate for reasons other than smoking.

Loss of health savings account contributions from Honeywell, which range up to $1,500 depending on the employee’s annual base wage and type of coverage

Wellness Programs

6

Ice on Fire

On April 20, 2015, the EEOC issued its long-

awaited proposed rule on wellness programs.

It generally tracks the HIPAA wellness rules, with

some important exceptions.

EEOC not yet effective, but EEOC has stated that it

is unlikely that a court or the EEOC would find an

ADA violation if an employer were following the

proposed rules.

Proposed rules has five essential requirements.

Wellness Programs – EEOC Proposed Rule

Ice on Fire

First Element: Employee health program, including any disability-related inquiries or medical examinations that are part of such programs, must be reasonably designed to promote health or prevent disease.

Similar to HIPAA wellness rules requirements.

Program must have a reasonable chance of improving the health of, or preventing disease in, participating employees.

Program must not be overly burdensome.

Program must not be a subterfuge for violating the ADA or other laws preventing employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.


Ice on Fire

Acceptable: Conducting an HRA and/or a biometric screening of employees for the purpose of alerting them to health risks of which they may have been unaware would meet this standard.

Acceptable: Use of aggregate information from employee HRAs by an employer to design and offer health programs aimed at specific conditions that are prevalent in the workplace would meet this standard.

Not Acceptable: Collecting medical information on a health questionnaire without providing employees follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design programs or treat any specific conditions would not be reasonably designed to promote health.

Not Acceptable: A program is not reasonably designed to promote health or prevent disease if it imposes, as a condition to obtaining a reward, an overly burdensome amount of time for participation, requires unreasonably intrusive procedures, or places significant costs related to medical examinations on employees. It is also not acceptable if the program exists mainly to shift costs from the covered entity to targeted employees based on their health.


Ice on Fire

Second Element: The program must be voluntary.

Employee cannot be required to participate.

Employee cannot be denied coverage under any group

health plan or particular benefit packages within a group

health plan for non-participation, nor can benefits be

limited for employees who do not participate.

Employer cannot take any adverse employment action or

retaliate against, interfere with, coerce, intimidate, or

threaten employees for not participating.


Ice on Fire

New Notice Requirement: Employer must provide employees a written notice that:

Is written so that the employee from whom medical information is being obtained is reasonably likely to understand it;

Describes the type of medical information that will be obtained and the specific purposes for which the medical information will be used; and

Describes the restrictions on the disclosure of the employee's medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the HIPAA Privacy Rule).


Ice on Fire

Third Element: Incentives (financial or in-kind) must not exceed a 30 percent limit of the total cost of employee-only coverage.

Incentive can be in the form of a reward or a penalty.

All rewards for all wellness programs connected with the group health plan must be combined and may not exceed the 30 percent limit.

Limit applies to participatory or health-contingent programs, or any combination of the two.

This roughly aligns with the HIPAA wellness rule limits; however, HIPAA's allowance to extend the limit to 30 percent of the cost of family coverage if family members are eligible to participate is conspicuously absent from the EEOC regulations.


Ice on Fire

Note that this would extend a financial limit to a HIPAA participatory program if the HIPAA participatory wellness program involves disability-related inquiries and/or medical examinations.

Not all participatory wellness programs require disability-related inquiries or medical examinations such as attending nutrition, weight loss, or smoking cessation classes. These kinds of participatory wellness programs would not be subject to the EEOC's limit on incentives.

This limit would not prevent employers from taking advantage of the HIPAA rules' allowance of a 50 percent incentive for tobacco-related wellness programs as long as the program did not involve disability-related inquiries or medical examinations.

Smoking cessation that merely asks employees whether or not they use tobacco (or whether or not they ceased using tobacco upon completion of the program) is not an employee health program that includes disability-related inquiries or a medical examination and could still utilize the HIPAA rules' allowance of an incentive up to 50 percent of the cost of the coverage.

A program that required employees to undergo a blood test or other medical examination to conclusively demonstrate the absence of tobacco use would involve a medical examination and would have to confine the reward to the 30 percent limit (even though HIPAA might have otherwise allowed an incentive of up to 50 percent).


Ice on Fire

Fourth Element: Reasonable accommodations

must be provided, absent undue hardship, to

enable employees with disabilities to earn

whatever financial incentive an employer offers.

Similar to the HIPAA wellness rules' requirement to

provide a reasonable alternative for health-

contingent programs.

ADA would also require a reasonable

accommodation under a participatory wellness

program subject to the ADA.


14

Ice on Fire

Examples.

An employer that offers a financial incentive to attend a nutrition class, regardless of whether employees reach a healthy weight as a result, would have to provide a sign language interpreter so that an employee who is deaf and who needs an interpreter to understand the information could earn the incentive (as long as providing the interpreter would not result in an undue hardship to the employer).

An employer would, absent undue hardship, have to provide written materials that are part of a wellness program in alternate format, such as in large print or on computer disk, for someone with a vision impairment.

An employer that offers a reward to completing a biometric screening that includes a blood draw would have to provide an alternative test so that an employee with a disability that makes drawing blood dangerous can participate and earn the incentive.


15

Ice on Fire

Fifth Element: Confidentiality requirements must be observed.

In general, information obtained from disability-related inquiries and medical examinations may only be provided to an employer in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of an employee.

An exception exists for the administration of a health plan.

HIPAA Privacy Rule must be observed, which will generally ensure compliance with the ADA's confidentiality obligations.


Ice on Fire

Participatory wellness programs – either:

None of the conditions for obtaining a reward is based on an

individual satisfying a standard related to a health factor; or

The program does not provide any reward.

Health-contingent wellness programs (two types):

"Activity-Only Wellness Program" – an individual is required

to perform or complete an activity relating to a health factor in

order to receive a reward.

"Outcome-Based Wellness Program" – an individual must

attain or maintain a specific health outcome in order to receive a

reward.

Types of HIPAA Wellness Programs

17

Ice on Fire

Examples:

Program that reimburses employees for all or part of the cost of

membership to a fitness center

A diagnostic testing program that provides a reward for participation

and does not base any part of the reward on outcome

A program that provides a reward to employees for attending a monthly

no-cost health education seminar

Must be available to all similarly situated individuals, regardless of

health status.

Not subject to the remainder of the HIPAA Final Wellness

Regulations discussed in the presentation.

Participatory Wellness Programs

18

Ice on Fire

5 Wellness Standards:

Reward limit

Reasonably designed

Available annually

Uniform availability and reasonable alternative standards

Disclosure requirement

Except where noted, the wellness standards are the same for both

activity-only wellness programs and outcome-based wellness

programs.

Outcome-based wellness programs are more strictly regulated

under the HIPAA Final Wellness Regulations to guard against

abuse.

Health-Contingent Wellness Programs

19

Ice on Fire

Reward can be in the form of carrot or stick – receiving a benefit or

avoiding a penalty/surcharge

Examples of rewards:

Discount or rebate of a premium or contribution

Waiver of all or part of a cost-sharing mechanism (such as deductibles,

copayments, or coinsurance)

An additional benefit

Any other financial or other incentive

The absence of a surcharge or other financial or non-financial

disincentive.

Wellness Standard #1: Reward Limit

20

Ice on Fire

Maximum reward:

General limit: 30% of the total cost of employee-only

coverage under the related health plan (employer

plus employee share).

Additional 20% (up to total of 50%) for reward tied to

smoking cessation program.

If spouses/dependents can participate, percentages

are applied against cost of total coverage in which

employee and spouse/dependents are enrolled.

Wellness Standard #1: Reward Limit (cont'd)

21

Ice on Fire

"Reasonably designed" means that the program:

Has a reasonable chance of improving the health of or

preventing disease in participating individuals and it is not

overly burdensome.

Is not a subterfuge for discrimination based on a health factor.

Is not highly suspect in the method chosen to promote health or

prevent disease.

For outcome-based wellness programs only:

A reasonable alternative standard to qualify for the reward must

be provided to any individual who does not meet the initial

standard based on a measurement, test, or screening that is

related to a health factor (see Wellness Standard #4).

Wellness Standard #2: Reasonably Designed

22

Ice on Fire

Program must give individuals eligible for the program the

opportunity to qualify for the reward under the program at least once

per year.

Standard encourages improvement of health over time and guards

against ongoing discrimination of unhealthy plan participants.

Wellness Standard #3: Available Annually

23

Ice on Fire

Rules for Uniform Availability Standard:

Reward must be made available to all similarly

situated individuals.

Full reward must be available to those individuals

who qualify by satisfying a reasonable alternative

standard ("RAS") (even if alternative is not met until

some date after the plan year begins).

RAS can simply be the waiver of otherwise

applicable standard.

Wellness Standard #4: Uniform Availability and Reasonable Alternative Standards

24

Ice on Fire

Rules for Uniform Availability Standard (cont'd)

If RAS is completion of an educational program, plan must

assist in finding program and pay for it

If RAS is diet program, plan must pay for program (not food)

Time commitment must be reasonable

If participant's personal physician states the plan standard is not

reasonable, plan must provide a RAS that accommodates the

recommendations of physician

Requirements for RAS differ depending on whether the

program is activity-only or outcome-based.


25

Ice on Fire

RAS Rules for Activity-Only Wellness Program

RAS must be provided to any individual if it is either:

Unreasonably difficult due to a medical condition to satisfy

standard or

Medically inadvisable to attempt to satisfy standard.

Plan may seek verification from participant's physician if

reasonable.

RAS need not be determined in advance, but must be offered

upon request.


26

Ice on Fire

RAS Rules for Outcome-Based Wellness Program

RAS must be provided to any individual who does not meet the

initial standard based on the measurement, test, or screening.

No requirement that failure be based on a medical condition.

If RAS is, itself, outcome-based:

RAS cannot be a requirement to meet a different level of the same

standard without additional time to comply (e.g., failure to achieve

BMI of 30 cannot require achievement of BMI of 31 on same day).

Individual must be given opportunity to comply with

recommendations of personal physician as a second RAS.

RAS need not be determined in advance, but must be offered

upon request.


27

Ice on Fire

All plan materials describing terms of program must disclose:

The availability of a reasonable alternative standard to qualify for the

reward.

Contact information for obtaining alternative reasonable standard.

A statement that the recommendation of an individual's personal

physician will be accommodated.

Sample language from HIPAA Final Wellness Regulations:

Wellness Standard #5: Disclosure Requirement

28

Your health plan is committed to helping you achieve your best health.

Rewards for participating in a wellness program are available to all

employees. If you think you might be unable to meet a standard for a reward

under this wellness program, you might qualify for an opportunity to earn the

same reward by different means. Contact us at [insert contact information]

and we will work with you (and, if you wish, with your doctor) to find a

wellness program with the same reward that is right for you in light of your

health status.

Ice on Fire

Evaluate health-contingent wellness programs under HIPAA final

wellness regulations.

Review all materials intended to communicate the program details

to ensure they include required disclosures related to reasonable

alternatives.

Consider how full reward will be provided to participants who take

longer to earn the reward under a reasonable alternative standard

(for example, will premiums be retroactively adjusted to reflect

wellness discount?).

Consider whether program will also require evaluation under ADA or

GINA (discussed next).

HIPAA Wellness Rules Takeaways

29

Ice on Fire

GINA provides broad protections in employment and health benefits against

the improper collection, use, or disclosure of employees' genetic

information (includes family history).

Cannot tie a reward to any program that seeks family medical history

or genetic information (e.g., cash for completing an HRA questionnaire

that asks about family medical history).

Cannot collect genetic information prior to or in connection with

enrollment.

Cannot use genetic information to automatically enroll individual in a

disease management program.

Genetic information cannot be disclosed to employer, only individual or

health care provider.

Genetic Information Nondiscrimination Act (GINA)

30

Ice on Fire

Do not request that employees provide family medical history before

enrollment, such as by completion of an HRA that seeks family medical

history.

Do not request any family medical history in connection with a program tied

to a reward.

If possible, eliminate all questions that relate to genetic information or family

medical history from any HRA or other screening tool provided to employees.

If genetic information or family medical history questions cannot be removed,

ensure the collection of such information is communicated as wholly voluntary

and not requested prior to enrollment.

Outsource administration of wellness programs, including collection of

individual medical information, to a third party and only accept results in the

aggregate.

GINA Takeaways for Wellness Programs

31

Ice on Fire

Rewards are taxable unless specifically excepted from tax under a

provision of the Internal Revenue Code.

Tax-free rewards:

Premium reductions

Cost-sharing reductions (deductibles, coinsurance, copayments)

Contributions to FSAs, HRAs, or HSAs

Cafeteria plan flex credits

Taxable rewards:

Cash

Gift cards

Movie or other entertainment ticket

Airline points

Internal Revenue Code: Taxing Rewards

32

Ice on Fire

Understand the tax treatment of rewards before they are issued.

If taxable, set up process for appropriate reporting and withholding,

as required.

If taxable rewards are provided by third party vendor, ensure vendor

contract addresses responsibility for applicable tax compliance.

Tax Takeaways for Wellness Programs

33

Ice on Fire

Information collected through wellness program is protected health

information (PHI) under the HIPAA Privacy Rule.

Health plan may only use PHI for treatment, payment, and health care

operations without the individual's written consent.

Employers may not use PHI from health plan for employment related

decisions.

HIPAA Privacy implications for wellness programs:

Reviewing claims data

Health risk assessments

Notification of reward

Privacy Laws – HIPAA Privacy

34

Ice on Fire

Make wellness program part of group health plan (health plan should

already have the built in protections for HIPAA privacy).

Use PHI for treatment, payment, and health care operations only.

Do not use PHI for employment related decisions.

Use PHI only minimally necessary in connection with wellness program.

Outsource administration of wellness programs, including collection of PHI,

to a third party and only accept results in the aggregate (aggregated data is

not PHI).

NOTE: compliance with HIPAA Privacy Rule will meet ADA confidentiality

requirements.

HIPAA Privacy Takeaways for Wellness Plans

35

Ice on Fire

Some states protect any lawful off-duty conduct that does not conflict with

the employer's business interests (e.g., regarding tobacco use or personal

decisions about diet/nutrition).

Church plans do not enjoy ERISA preemption from such state laws, so the

scope of any such laws should be examined with respect to wellness

programs.

May impact the types or sizes of the reward/penalty that is permissible.

State Lifestyle Laws

36

Ice on Fire 37

THANK YOU

eeoc wellness rules - ice miller llp...on april 20, 2015, the eeoc issued its long-awaited proposed...

Documents