Source: https://regproject.org/paper/wellness-plans/
Timestamp: 2019-04-21 05:21:25+00:00

Document:
In this paper, Diana Furchtgott-Roth and Gregory Jacob discuss the EEOC’s 2016 regulations defining the extent to which the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) permit employer-sponsored wellness plans. While the EEOC’s final regulations purport to “harmonize” wellness plan requirements, the papers authors argue that the EEOC has in fact added several additional regulatory burdens on employers that administer wellness plans.
To cite this paper: D. Furchtgott-Roth, et al., “A Spoonful of Clarity Will Help Wellness Plans Thrive”, released by the Regulatory Transparency Project of the Federalist Society, September 8, 2017 (https://regproject.org/wp-content/uploads/RTP-Labor-Employment-Working-Group-Paper-Wellness-Plans.pdf).
Generally speaking, wellness plans seek to educate employees and their families about health-related issues, promote the maintenance of healthy lifestyles, and encourage participants to live healthier lives. Employers offer two primary types of wellness plans: participatory wellness plans are those that either provide no financial incentive for participation or provide an incentive that is not tied to satisfying a health-related standard. In contrast, health-contingent wellness programs require an employee to complete a health-related activity (“Activity-Only Plans”) or to achieve a health-related outcome (“Outcome-Based Plans”). Depending on the type of wellness plan, employers must ensure their plans comply with four different federal statutory regimes: the ADA, ACA, HIPAA, and GINA.
In July 2000, the EEOC clarified that “a wellness program is ‘voluntary’” — and therefore lawful — “as long as an employer neither requires participation nor penalizes employees who do not participate.”8 The EEOC did not at that time define what it meant to “require” participation or to “penalize” employees who did not participate, nor did it purport to do so until it issued its regulations on May 16, 2016.
Depending on the type of wellness plan, employers must ensure their plans comply with four different federal statutory regimes: the ADA, ACA, HIPAA, and GINA.
The EEOC’s Final Rules require a wellness plan to be “reasonably designed to promote health or prevent disease.”13 The Final Rules state that a wellness plan will satisfy this standard if there is “a reasonable chance of improving the health of, or preventing disease in, participating employees,” and the plan is not “overly burdensome, is not a subterfuge for violating the ADA or other laws…, and is not highly suspect in the method chosen….”14 However, the EEOC does not define any of these terms, and the use of such ambiguous terms and vague phrases as “reasonably,” “reasonable chance,” “not … overly burdensome,” and “[not] a subterfuge,” leaves employers to guess about what these rather amorphous terms and phrases actually mean.
The Final Rules also clarify that a wellness plan is “voluntary” if the financial reward for participation “does not exceed … [t]hirty percent of the total cost of self-only coverage.”16 Critically, in several ways, this limit on incentives differs from the permissible incentives that can be offered under the ACA and HIPAA.
The Final Rules also differ from ACA and HIPAA regulations by imposing additional reasonable accommodation requirements. Under the Final Rules, employers must provide reasonable accommodations for participatory and health-contingent plans. The ACA and HIPAA, however, require only “reasonable alternative standards” for health-contingent plans.23 Even then, the ACA requires only reasonable alternative standards under certain circumstances based on whether the wellness plan is activity-only or outcome-based.
While the EEOC’s Final Rules purport to “harmonize” wellness plan requirements under the ADA, GINA, HIPAA, and ACA, the EEOC has in fact added several additional regulatory burdens on employers that administer wellness plans. Specifically, the EEOC’s regulations impose limitations on wellness plans that are inconsistent with the ACA and existing regulations. Employers who operate or seek to implement wellness plans must carefully review their plans to ensure compliance with the established HIPAA and ACA regulations, as well as the EEOC’s overlapping regulations under the ADA and GINA, at least until the federal courts determine whether the EEOC’s regulations are lawful.
1 Regulations Under the American’s With Disabilities Act, 81 Fed. Reg. 31126 (May 17, 2016) (to be codified at 29 C.F.R. § 1630); Genetic Information Nondiscrimination Act, 80 Fed. Reg. 31143 (May 17, 2016) (to be codified at 29 C.F.R. § 1635).
2 Statement of EEOC Chair Jenny R. Yang, April 16, 2015 (last visited May 18, 2016); Statement of EEOC Chair Jenny R. Yang, May 16, 2016 (last visited May 18, 2016).
3 Proposed Rules, 80 Fed. Reg. at 21,662-63 (“[C]ompliance with the standards in HIPAA is not determinative of compliance with the ADA….”).
4 EEOC v. Orion Energy Sys., Inc., Case No. 14-1019 (E.D. Wis. filed Aug. 20, 2014); EEOC v. Flambeau, Inc., Case No. 14–cv–638–bbc, 2015 WL 9593632 (W.D. Wis. Dec. 31, 2015); EEOC v. Honeywell Int’l, Inc., Civil No. 14-4517, 2014 WL 5795481 (Nov. 6, 2014).
5 42 U.S.C. § 12201(c)(2).
6 42 U.S.C. §§ 12112(d)(4)(B), 12201(c)(2).
7 42 U.S.C. § 2000ff–1(b)(2).
8 Enforcement Guidance: Disability-Related Inquiries and Medical Examinations of Employers Under the Americans with Disabilities Act (ADA), EEOC (July 27, 2000).
9 42 U.S.C. § 300gg-4(j)(3)(A).
10 45 C.F.R. § 146.121(f)(2)-(5).
11 42 U.S.C. § 300gg-4(j)(3)(A).
12 45 C.F.R. § 146.121(f)(5).
13 EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,139 (May 17, 2016) (to be codified at 29 C.F.R. § 1630.14(d)(1)).
15 Id. at 31,139-40 (to be codified in 29 C.F.R. § 1630.14(d)(2)(i)-(iv)).
16 Id. at 31,140 (to be codified in 29 C.F.R. § 1630.14(d)(3)).
17 45 C.F.R. § 146.121(f)(2), (5).
18 EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,140-41 (May 17, 2016).
19 Compare 42 U.S.C. 300gg-4(j)(3)(A) (ACA), and 45 C.F.R. § 146.121(f)(3)(ii), (f)(4)(ii) (HIPAA), with EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,139-40 (May 17, 2016) (to be codified in 29 C.F.R. § 1630.14(d)(3)).
20 80 Fed. Reg. 31,143, at 31,158.
21 45 C.F.R. § 146.121(f)(5); EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,141-42 (May 17, 2016).
23 45 C.F.R. § 146.121(f)(2)-(f)(5).
25 EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,139-40 (May 17, 2016) (to be codified in 29 C.F.R. § 1630.14(d)(2)(iv)).
27 Genetic Information Nondiscrimination Act, 80 Fed. Reg. 31143, 31158 (to be codified at 29 C.F.R. § 1635.8(b)(2)(iii)).
29 Id. at 31,137; Id. at 31,140 (to be codified in 29 C.F.R. § 1630.14(d)(4)(iv)).
30 Id. at 31,140 (to be codified in 29 C.F.R. § 1630.14(d)(4)(iii)).
31 Seff v. Broward Cnty., 691 F.3d 1221 (11th Cir. 2012).
32 EEOC v. Flalmbeau, Inc., 14–cv–638–bbc, 2015 WL 9593632 (W.D. Wis. Dec. 31, 2015).
33 EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,140 (May 17, 2016) (to be codified in 29 C.F.R. § 1630.14(d)(6)).
35 EEOC v. Flambeau, Inc., No. 16-1402, Doc. No. 17 (7th Cir. May 17, 2016).
37 EEOC v. Flambeau, Inc., 846 F.3d 941 (7th Cir. 2017).
38 EEOC v. Orion Energy Sys., No. 14-019, Doc. No. 47-1 (E.D. Wis. May 17, 2016).
40 EEOC, Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. at 31,129.
41 EEOC v. Orion Energy Sys., No. 14-1019, 2016 U.S. Dist. LEXIS 127292 (E.D. Wisc. Sept. 29, 2016).

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