Wellness programs

ACA Regulations:  HIPAA

On June 3, 2013, the Departments of the Treasury, Labor and Health and Human Services jointly issued final rules regarding proposed amendments to regulations, to be consistent with the Affordable Care Act (ACA), relating to wellness programs in group health coverage. The final rules were first proposed on Nov. 26, 2012.

The final rules updated the existing Health Insurance Portability and Accountability Act (HIPAA) wellness program rules and also implemented the nondiscrimination provisions made applicable to the individual market by section 1201 of the ACA.

The wellness program exception to the prohibition on discrimination under the existing HIPAA rules and the ACA apply to group health plans (and any health insurance coverage offered in connection with such plans) but does not apply to health insurance coverage offered in the individual market. The final rules, which impose incentive cap limits and other requirements on health-contingent wellness programs, apply to all grandfathered and non-grandfathered fully insured and self-funded group health plans for plan years beginning on or after January 1, 2014.

EEOC Regulations:  ADA and GINA

On May 17, 2016, the Equal Employment Opportunity Commission (EEOC) issued regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) that address the extent to which employers may offer incentives to encourage participation in employer-sponsored wellness programs. The new requirements were applicable to plan years beginning on or after January 1, 2017.

These new regulations apply to wellness programs that are both participatory and health-contingent. And, the regulations apply to wellness programs that are part of a group health plan as well as those outside of the group health plan.

The regulations include a number of requirements, including, but not limited to, the following:

  • Impose an incentive cap of 30% of the total cost of certain self-only coverage.
  • Require employers to provide a notice to their employees explaining what medical information will be obtained, how it will be used, who will receive it, the restrictions on disclosure and the methods used to prevent improper disclosure.
  • Reiterate the requirement that spouses must provide prior, knowing, written authorization before providing genetic information, which includes information about the manifestation of a disease or disorder, through a health risk assessment, which may include a healthy questionnaire, medical examination, or both.
  • Prohibit incentives to dependent children regardless of age or whether the child is adopted or biological, for providing information about the manifestation of a disease or disorder.

Employers should be mindful of other regulations addressing wellness programs, including, but not limited to, the HIPAA wellness regulations noted above, which are separate and distinct from the EEOC rules

Employers should consult their legal counsel for program evaluation and compliance with applicable law.

Recent Court Ruling:  EEOC Regulations

  • AARP challenged the EEOC rules, and last August, the court found that the EEOC “had not provided a reasoned explanation…that set particular incentive levels for providing certain medical data to healthcare providers.”
  • More specifically, the court found that the EEOC “failed to adequately explain its decision to construe the term ‘voluntary’ in the ADA and GINA to permit the 30% incentive level adopted in both the ADA rule and the GINA rule.”

In response to that decision, the EEOC recently told the court it plans to propose new regulations by August 2018, and finalize them by October 2019 with an effective date of likely no earlier than 2021.

  • In its latest order, the court indicated its general displeasure with the EEOC’s approach and timeline, noting that the commission hinted “that the process could take even longer as it starts to look into the substance of the issues involved and as new nominees eventually join the commission.”
  • The court continued that not having a new rule ready to take effect for over three years was “not what the court envisioned when it assumed that the commission could address its errors ‘in a timely manner.’”

Therefore, the court has vacated the portions of the EEOC rules that were challenged by the AARP – i.e., the provisions around incentive levels – but only starting in January 2019.  This decision has no impact on the HIPAA wellness regulations.

For more information