EEOC's Proposed ADA Wellness Plan Rule Elicits Critical Comments From All Sides

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By Kevin McGowan

June 26 — The Equal Employment Opportunity Commission under the Americans with Disabilities Act should permit employers to offer the same financial incentives for participation in workplace wellness programs that are currently available under the Affordable Care Act and its implementing regulations, congressional Republicans and multiple business groups said in comments submitted to the commission.

The EEOC in April issued a proposed rule (RIN 3046-AB01) to amend its ADA regulations regarding when employer-sponsored wellness plans that include medical exams and inquiries fit within an ADA exception for “voluntary” health care programs. During a 60-day period that ended June 19, the EEOC received about 340 comments on its proposal plus more than 2,400 nearly identical letters objecting to wellness programs asking employees about pregnancy.

Republican members of Congress and business representatives commended the EEOC for attempting to align its ADA rules with the Affordable Care Act's encouragement of employer-sponsored wellness programs and the 2013 final regulations promulgated under the 2010 health care law by the departments of Labor, Health and Human Services, and Treasury.

Align Incentives With ACA Rules 

But they criticized the EEOC for not completely coordinating the permissible financial incentives under the ADA with those allowed under the ACA and the “tri-agency” regulations. They urged the EEOC to allay confusion and ease administrative burdens for employers that offer wellness programs as part of their group health care plans by allowing the same financial incentives under the ADA as are available under the federal health care law.

“We appreciate that EEOC responded to Congress and employers by issuing this proposed rule, intended to provide clarity to employers about how the EEOC believes the ADA applies to employee wellness programs,” a group of 17 House and Senate Republicans said in its comments. “However, the proposed rule is inconsistent with both current law and the bipartisan intent of Congress and fails to clarify important issues.”

The Affordable Care Act is “explicit” that employers may offer employees up to a 30 percent insurance premium reward for participation in wellness programs, the Republican members said. They also noted the Labor, Treasury and HHS secretaries exercised their statutory discretion to increase the maximum premium reward for tobacco cessation programs to 50 percent of an employee's insurance costs.

“Instead of setting a cap of a 30 percent maximum reward in its proposed rule, EEOC should tie the maximum permissible premium reward to the percentage set by the tri-agency regulations,” said the Republicans, who include Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (Tenn.) and Rep. John Kline (Minn.), chairman of the House Education and the Workforce Committee.

The HR Policy Association said in its comments EEOC should “significantly modify the proposed rule to clarify, consistent with the ACA, that employers can offer financial incentives up to 30 percent for family coverage and up to 50 percent for smoking cessation programs that screen for tobacco use, and to remove subjective and ill-defined requirements that will discourage innovation in wellness program design and increase litigation.”

The EEOC “should administer the ADA in a manner that is fully consistent with the ACA, rather than introducing ambiguous standards that will discourage employee participation and increase the potential for costly and unnecessary litigation,” said the group, which represents chief human resources officers at large U.S. companies.

Disability Groups Oppose EEOC Proposal 

Meanwhile, disability rights organizations said wellness programs can't be deemed “voluntary” under the ADA if employees could face thousands of dollars in “penalties” for declining to submit to medical exams or to answer questions about their current health conditions.

Many wellness programs feature health risk assessments, questionnaires that ask employees about their lifestyle choices and medical histories. Some programs also include biometric testing, such as blood pressure screening, blood tests to check for nicotine, glucose or cholesterol levels and body mass index tests. Participatory plans don't include steps beyond employee education and possible referrals for care, while health-contingent programs require employees to satisfy health outcome targets to receive employer-provided financial incentives.

The ADA generally bars employers from requiring medical tests or from asking employees about their medical conditions unless the exams or inquiries are job-related and consistent with business necessity. But the ADA also permits “voluntary medical examinations, including voluntary medical histories, which are part of employee health programs available to employees at that work site.”

The EEOC's proposed rule, which limits employer financial incentives for wellness plan participation to 30 percent of the cost of employee-only health coverage, says limited incentives don't render a wellness program involuntary and therefore fit within the ADA exception for employee health programs.

But the disability rights groups—including the Bazelon Center for Mental Health Law and the American Association of People with Disabilities—said the EEOC proposal, if adopted, would erode the ADA's protections because workers will feel coerced to participate in wellness programs that include medical exams and inquiries or face stiff financial penalties.

The EEOC should maintain its existing position, set out in a July 2000 agency enforcement guidance, that any employer financial inducement to employees to divulge medical information that isn't job-related can't be deemed “voluntary” under the ADA exception, the Bazelon Center said in its comments.

The EEOC faced similar arguments when developing its 2010 final rule implementing the Genetic Information Nondiscrimination Act, the Bazelon Center said. Under the GINA regulations, employers can't offer financial incentives for an employee to surrender genetic information, which includes family medical history, the group said.

The EEOC should adopt the same approach under the ADA and issue a rule that prohibits an employer from financially penalizing a worker who declines to answer questions on a health risk assessment that touch on his medical condition, for example, the Bazelon Center said.

The EEOC's proposal would create a split between the ADA and GINA regarding interpretation of very similar statutory language, the group said.

Health Care Law Didn't Silently Repeal ADA

Congress didn't repeal the ADA by implication when it passed the Affordable Care Act in 2010, the Bazelon Center said. Even if the two laws do conflict, the group said, the ADA’s requirements regarding medical exams and inquiries should be given effect because they are more specific than the ACA provisions.

“[T]he [EEOC] should continue to interpret the ADA’s requirement that wellness program medical exams and inquiries that are not job-related be ‘voluntary’ to bar penalties for failure to participate in such exams and inquiries,” the Bazelon Center said. “The [EEOC] should specify that this requirement is to be implemented in the same way as the parallel requirement in GINA: if financial inducements are offered to employees for completing a health risk assessment, the inducements must be offered regardless of whether the employee chooses to answer questions about medical information.”

The American Association of People with Disabilities, an advocacy group based in Washington, echoed those sentiments.

“If adopted, this proposed rule would significantly diminish the right of workers with disabilities to keep disability-related information out of the hands of their employers and protect themselves from discrimination,” the AAPD said in its comments.

The proposed rule “allows employers to use steep financial penalties in wellness programs to force workers to disclose sensitive medical information to their employers,” the AAPD said. “Without directly saying that it is abandoning its prior position that a voluntary wellness program inquiry cannot involve penalties, the [EEOC] does exactly that.”

The National Council on Disability, an independent federal agency that makes recommendations to the president and Congress on disability rights issues, also criticized the EEOC's proposed rule.

The proposed regulations would “narrow critical protections” for employees in the ADA “in a manner contrary to congressional intent,” the council commented. It said the EEOC “appears to rely upon an incorrect assumption” that the Affordable Care Act “requires these detrimental changes to the ADA.”

“[W]e do not believe Congress intended to upend critical ADA workplace protections when they passed [the Affordable Care Act], particularly since there is no congressional evidence of such intent,” the council said. “Furthermore, we believe ACA’s wellness program provisions can be implemented consistently with the ADA’s limitations on employers pertaining to medical exams and inquiries without any change to the ADA’s protections being necessary.”

Tobacco Cessation Incentives Called Critical 

Meanwhile, the business groups, wellness firms and some health care industry representatives that commented urged the EEOC to completely align wellness plan financial incentives permitted under the ADA with those allowed under the Affordable Care Act, the Health Insurance Portability and Accountability Act and existing health care law regulations.

The EEOC's 30 percent cap on financial incentives would be based on the premium for employee-only coverage and wouldn't increase even if an employee has family coverage and an employer allows covered spouses and dependents to participate in the wellness program.

The EEOC financial incentive limit also would apply both to participatory and health-contingent programs, while the ACA's 30 percent limit applies only to health-contingent plans. The ACA places no limit on employer financial incentives for participatory plans. The ACA's 30 percent limit applies to the cost of family coverage if an employer permits spouses and dependents to participate in the wellness program.

As permitted under the ACA, the secretaries of Labor, HHS and Treasury allow employers to offer up to 50 percent off employee health insurance premiums for enrollment in tobacco cessation programs. But the EEOC proposal doesn't mention tobacco cessation, meaning such programs presumably are included within the global 30 percent limit on employer incentives.

The EEOC should permit employer financial incentives for wellness program participation under the ADA that are the same as those currently allowed under the ACA, including the 50 percent reward for tobacco cessation, the ERISA Industry Committee said in its comments.

The EEOC “can and should use its interpretive authority to conclude that tobacco testing does not implicate the ADA policy concerns posed by general medical examinations because tobacco consumption testing does not create any risk that employers will identify and discriminate against disabled Americans,” ERIC said.

“Any additional regulations must not contradict existing regulations on wellness programs or inhibit employers’ ability to offer wellness programs that are in compliance with the ACA,” the Business Roundtable said in its comments.

The EEOC should clarify the maximum 30 percent incentive applies to family health insurance coverage if an employee’s spouse and/or dependents are eligible for the wellness program, the Roundtable said.

Financial incentives related to smoking cessation programs, including those that feature nicotine testing, shouldn’t be limited below the ACA’s requirements, the group said.

“[T]obacco cessation is one of the most cost-effective measures to reduce health-care costs and improve productivity in the workplace,” the Roundtable said. “It is important that employers have the flexibility to design smoking cessation programs to meet the needs of their workforce, as well as the ability to offer adequate rewards to [encourage] their employees to cease tobacco use.”

No New Notice Requirements 

The EEOC also shouldn't require employers to provide ADA-specific notices to employees regarding wellness plans that duplicate notices already mandated under the Employee Retirement Income Security Act and HIPAA, the business groups said.

The EEOC proposal would require employers that offer wellness programs to give employees a notice “that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the covered entity will [use] to prevent improper disclosure.”

The EEOC should eliminate “this redundant and burdensome notice obligation” that would repeat matters already covered under ERISA in the summary plan description, in open enrollment materials and in privacy notices required under HIPAA, ERIC said.

If the EEOC decides it’s critical to require more notice, then the agency should “adopt a more general notice requirement that could address all applicable wellness programs offered by a particular employer and permit employers to incorporate such language into any appropriate document,” ERIC said.

The EEOC also sought comment on whether the ADA requires signed acknowledgement forms from employees that would certify they are voluntarily participating in a covered wellness program. None of the business groups that commented thought such an informed consent requirement is required by the ADA or a wise choice by the EEOC.

Requiring “written, positive acknowledgment” that an employee's participation is voluntary would “pose an undue and large administrative burden on the employer,” the Cleveland Clinic said in its comments.

The Cleveland Clinic “includes a statement on every letter pertaining to its wellness program stating that participation is voluntary and requires that each participant take positive steps to enroll,” the clinic said. “Because the default behavior is non-enrollment, it is Cleveland Clinic's view that this step constitutes voluntary participation.”

Meanwhile, the Bazelon Center said the EEOC's proposed notice and confidentiality protections are insufficient to protect employees who participate in wellness programs from potential involuntary disclosure of medical conditions or disabilities. “We urge the [EEOC] to strengthen these protections as they are inadequate to prevent employees from being harmed,” the center said.

EEOC Shouldn't Dive Into Affordability 

The EEOC ventured into areas outside its authority under the ADA to the extent the agency asked if an employer's financial incentives' effects on the “affordability” of an individual employee's health insurance coverage should be considered in determining whether a wellness program is “voluntary” under the ADA, several commenters said.

Under the Affordable Care Act, large employers must offer to their employees at least one affordable health insurance package, which has been administratively defined as coverage costing the employee 9.5 percent or less of his or her household income.

The EEOC proposal asked whether to be considered “voluntary” under the ADA, the incentives provided in a covered wellness program may not be so large as to render health insurance coverage unaffordable to an individual employee under the ACA and its regulations.

Based on the comments received, the answer from employers, business associations and wellness program providers is a resounding “no.”

The EEOC shouldn’t exceed its jurisdiction under the ADA by delving into questions regarding wellness plan design or the affordability of health care coverage for individual employees, the Business Roundtable said.

The EEOC’s proposed link between “voluntary participation in wellness programs” and the “affordability test” for employer-provided insurance coverage under the ACA should be scrapped, the Retail Industry Leaders Association said in its comments.

“The EEOC has no jurisdiction in this policy area and should not be proposing such regulations,” the retailers group said.

Also, an employer's use of “gateway plans” that offer an employee an enhancement from basic health care coverage if the employee elects to participate in a wellness program shouldn't be deemed coercive under the ADA, the ERISA Industry Council said.

“Given the robust nature of today’s basic level of health coverage, we do not believe that such a gateway design should be viewed as inappropriately coercive, particularly when compared to prior design approaches that refused any health coverage for individuals who refused to complete a [health risk assessment],” the council said.

Employees who decline to participate in the gateway wellness program retain their access to employer-provided health coverage, ERIC emphasized.

“Many employers find such a design-based approach to be more appropriate for, and more appreciated by, employees than an approach that incentivizes employees to participate in wellness programs through monetary distinctions in premiums,” the council said. “Employers should be permitted to continue to offer an array of incentives that are best suited to the needs of their workforce.”

Respect ADA ‘Safe Harbor.'

The EEOC in its proposal expressed the agency's disagreement with the U.S. Court of Appeals for the Eleventh Circuit's decision in Seff v. Broward Cnty., 691 F.3d 1153, 26 AD Cases 1153 (11th Cir. 2012), in which the court ruled a Florida county's wellness program that financially penalized nonparticipants fit with an ADA “safe harbor” for the terms of “bona fide benefits plans” offered to employees.

In a footnote to its proposed rule, the EEOC said it doesn't believe the ADA’s insurance “safe harbor” provision, as interpreted in Seff, is “the proper basis for finding wellness program incentives permissible.” Instead, the agency said the act's medical exams and inquiries exception for “voluntary” employee health programs is the ADA's “clear” safe harbor for wellness programs. “Reading the insurance safe harbor as exempting these [wellness] programs from [ADA] coverage would render the ‘voluntary' provision superfluous,” the EEOC said.

But business groups that commented said Seff is a controlling ADA interpretation, particularly within states covered by the Eleventh Circuit, and the EEOC improperly discounted the court's reading of the statute.

The court's decision in Seff “does not represent an exercise in judicial freelancing—rather, Seff interprets a statutory safe harbor that may not be removed from the ADA through regulatory fiat,” ERIC said.

Because of the ADA safe harbor and the Eleventh Circuit's interpretation, “employers will continue to claim (and courts will continue to agree) that the ADA does not apply to, and in turn, the [EEOC] does not have authority over, the wellness program of a bona fide benefits plan,” the council said.

“We would strongly encourage [the EEOC] to re-propose the regulations to align the definition of a [bona fide benefits plan] so that it’s consistent with the definition used by [the Labor Department] and also address the following: when a [bona fide benefits plan] is basing its terms on underwriting associated with a wellness program; how a [bona fide benefits plan] classifies risks for purposes of the safe harbor; and how a [bona fide benefits plan] should administer the risks associated with its wellness program,” ERIC said.

The HR Policy Association also criticized as “inappropriate” the EEOC's “blanket rejection” of Seff.

“Although the EEOC may disagree with the appeals court ruling in Seff, it is obligated to accurately recognize the decision until such time [as] another court issues a different opinion,” the association said. “As such, the EEOC should recognize that some wellness plans may fall within the insurance safe harbor provision and may be permissible under the ADA.”

Whenever the EEOC does issue its final rule under the ADA, the effective date must give employers time to modify and implement new wellness plan designs, several of the business groups said. They urged an effective date of no sooner than Jan. 1, 2017, noting that the EEOC also is expected soon to issue a proposed rule under GINA regarding when use of genetic information in wellness plans may be deemed “voluntary” and therefore acceptable under that statute.

To contact the reporter on this story: Kevin McGowan in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of comments on the EEOC's proposal are available online at!docketBrowser;rpp=25;po=0;D=EEOC-2015-0006.

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