New federal regulations that take effect Jan. 1 may require some employers to adjust the incentives they offer to get employees to join their workplace wellness programs.
The changes by the U.S. Equal Opportunity Employment Commission essentially broaden the incentives that will fall under federal regulations designed to ensure that wellness programs remain voluntary and that rewards are kept in check.
Essentially, the rewards cannot be “so high that individuals feel compelled to participate or share their medical history information,” said benefits attorney Norbert Kugele, a partner at Warner Norcross & Judd LLP in Grand Rapids.
“At the end of the day, you’re going to find more incentives are swept in under the EEOC regs,” Kugele said.
A number of federal laws regulate employer wellness programs, including the Americans with Disabilities Act, the Affordable Care Act and the Genetic Information Nondiscrimination Act.
The varying requirements of the laws at times have left unclear the extent to which employers can embed incentives into wellness programs to encourage employees to voluntarily perform health-risk assessments or undergo screenings to gauge their health risks, Kugele said.
The EEOC has filed lawsuits against corporations that it claimed went too far with their wellness incentives and essentially rendered their wellness programs involuntary and in violation of the Americans with Disabilities Act.
Federal courts have generally ruled against the agency, Kugele said, adding that the latest regulations seek to clarify the EEOC’s position.
“They’re basically trying to put in writing their interpretation when wellness programs should be considered voluntary and not in violation of the Americans with Disabilities Act, and then putting in place confidentiality requirements that apply to the data that’s collected,” he said.
Federal rules cap wellness rewards at 30 percent of the cost of coverage, and 50 percent for an initiative that targets tobacco use. Employers were only required to count the value of a reward toward the cap if it affected an employee’s plan, such as through discounted premiums or lower deductibles, and were tied to a person achieving a specific health outcome.
Rewards that employees may get simply for participating in the wellness program — or that employers offered independently from the health coverage — did not count toward the cap.
Under the EEOC’s new regulation, the 30-percent cap for the cost of individual coverage applies to all wellness rewards, even if they are offered outside of the health plan, Kugele said. The cap also applies to spouses who participate in a wellness program and provide information on their health statuses.
“The EEOC is concerned that the total amount of rewards offered through wellness programs has grown to the point where individuals feel coerced to take health risk assessments or biometric screenings,” Kugele wrote in a recent briefing that advised clients to review their wellness rewards to verify they meet with the regulations.
“To ensure that your company’s wellness program complies with these new requirements, you will want to consider all rewards — no matter the value — that are available to employees and their spouses under any and all wellness programs you operate, including where the value of the awards may vary for employees based on utilization, such as reduced co-pays or deductibles,” he wrote.
Across the U.S., “nearly all” of the large employers surveyed in 2015 by benefits firm Mercer offered some kind of program to support employee health and well-being. Health-risk assessments, health screenings such as cholesterol and blood pressure checks, and disease management “have become mainstays” of such programs, according to Mercer.
Incentives take various forms, including employees paying a reduced share of their premiums, health savings accounts or health reimbursement arrangements, lower copays and deductibles, and cash or gift cards.
“Now you’re going to have to look at all of those incentives and make sure that you’re going to fall within the 30-percent cap that the new regulations impose on those things,” Kugele said.
Among the employers answering the Mercer survey, 54 percent said they use incentives to get employees to complete health-risk assessments with a median $360 reduction on their share of the premiums. Forty percent offer an incentive for undergoing health screenings with a median premium reduction of $415.
More than one in five employers also required lower employee premium contributions if they do not use tobacco.