Many employers offer a reduction in health insurance premiums to employees who participate in wellness programs that are reasonably designed to promote health and prevent disease. For example, an employer may offer up to a 30% discount of the total cost for self-only coverage of the plan in which the employee is enrolled, if the employee answers questions about his health conditions, has biometric screening, or receives an annual physical. However, to maintain compliance with the Americans with Disabilities Act (ADA), the EEOC has ruled that the program must be voluntary and an employer must take reasonable action with respect to the collected information and cannot use the collected information simply to shift costs from the employer to employees based on their health or to predict the employer’s future health costs.

Effective on the first day of the plan year beginning on or after January 1, 2017, to ensure that an employee’s participation is voluntary, an employer must provide a notice that clearly explains (i) what medical information will be obtained, (ii) how it will be used, (iii) who will receive it, and (iv) the restrictions on disclosure. Although the EEOC rules do not state when the notice must be provided, we recommend that the notice be provided annually with open enrollment materials.

This rule applies only to wellness programs that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty. It does not apply, for example, to a wellness program that simply requires employees to engage in a certain activity (such as attending a nutrition or weight-loss class or to walk a certain amount every week) in order to earn an incentive.

In the final rule, smoking-cessation programs that require employees to be tested for nicotine use are distinguished from programs that merely ask employees whether they use tobacco (or whether they ceased using tobacco by the end of the program). The latter would not be regarded as asking disability-related questions. Therefore, the rule’s 30 percent incentive limit does not apply and an employer can offer an incentive up to 50 percent of the cost of self-only coverage, consistent with the HIPAA, as amended by the Affordable Care Act. However, where an employer requires any biometric screening or other medical procedure that tests for the presence of nicotine or tobacco, the rule’s 30 percent incentive limit applies.

The notice is available at EEOC Wellness Notice, and a brief question-and-answer document describing the notice requirement and how to use the sample notice is available at EEOC Wellness Questions and Answers.

Action items for employers include

• Eliminating any required conditions to participation in the employer’s group health plan, such as a medical examination or participation in a health risk assessment.

• Reviewing current notices to employees to determine whether they satisfy the new EEOC notice requirements.

• Acting upon any medical information obtained, for example, by designing programs targeted specifically to medical conditions prevalent among the employer’s workforce.

• We are available to discuss the new EEOC rules’ impact on and applicability to your group health plan.