Just as we predicted at the beginning of the year, the EEOC has issued its final rules to amend the regulations implementing Title II of GINA as they relate to employer-sponsored wellness programs (released May 16, 2016). The EEOC also issued its final rule to amend Title I of the ADA to provide guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries and/or take part in a medical exam. As we continue to review these updates, we wanted to immediately make you aware of the following key elements:
- The Rules are effective the plan year starting January 1, 2017 or upon renewal following January 1, 2017. (If your plan year starts in March, then you would have to comply by March, 2017.)
- Participation in a wellness program cannot be required to determine eligibility for health plan coverage (gatekeeper).
- The term “inducement” has replaced “incentive.” An inducement is defined as either an incentive or a penalty.
- Rewards based on participation (such as completing a health assessment) must now be included in the calculation to determine if incentives exceed 30% of total premium.
- Additionally, “in-kind” awards like PTO days, coffee mugs and other non-financial incentives will be calculated toward the cap of 30% of total premium. This may be problematic for “reward-mall” type incentives where points are accumulated and spent on merchandise. At a minimum, it appears the value of the merchandise will need to be counted toward the 30% maximum.
- The 30% calculation must be based on the cost of employee only coverage in the least expensive plan option that includes the wellness program (instead of the plan in which a person is enrolled). If spouses are included, you can use 2x the single amount (instead of 30% of family premium).
- Employees not on the company’s health plan can now participate in the wellness plan and earn inducements without fear of wage discrimination claims.
- Tobacco incentive is included in 30% maximum calculation if an exam is required to prove non-use. If an incentive is based upon attestation you can use up to 50% of total premium.
We are reviewing the final regulations thoroughly and finding more than a few gray areas and unanswered questions and are in search of answers.