Today the Equal Employment Opportunity Commission (EEOC) published long-awaited proposed regulations on wellness programs (Proposed Regs) that are intended to harmonize certain provisions of the Americans with Disabilities Act (ADA) with long-standing rules concerning wellness programs applicable to group health plans under the Health Insurance Portability and Accountability Act (HIPAA), and more recently, the Affordable Care Act (ACA). To be clear, these regulations are proposed at this point, and they can be influenced by comments the EEOC receives from stakeholders over the next 60 days. So, employers, wellness program administrators and other stakeholders, you’ll need to move quickly and submit comments if you would like to see some changes and clarifications to these proposed rules before they become final.

By and large, the proposed regulations provide some relatively good news for employers maintaining certain wellness programs.  There certainly would be increased harmony between the ADA and the HIPAA/ACA rules. However, nothing is easy, and that is the case here as the EEOC did not propose a wholesale adoption of the HIPAA/ACA rules. Employers and others need to review these rules carefully to understand their effects on all wellness programs, including those that are operated as part of a group health plan. Here are some important issues to consider:

  • For covered wellness programs that are part of a group health plan, the Proposed Regs would cap the allowable incentive at 30% of the cost of employee-only coverage (remember that under the ACA and HIPAA this means the employer and employee portion of the premium), even though the ACA allows incentives for certain tobacco cessation programs to go as high as 50%.
  • The Proposed Regs appear to reference only employee-only coverage as the basis for calculating the 30% cap. But, the HIPAA/ACA rules apply the 30% cap to other tiers of coverages, such as family coverage, which increases substantially the amount of incentives available for use.
  • The Proposed Regs say the ADA’s safe harbor does not apply to wellness programs.  They claim it renders the Title I ADA provisions on voluntary wellness programs “superfluous.”  This is contrary to court decisions (including the federal Court of Appeals for the Eleventh Circuit) and is most certain to be controversial.
  • The Proposed Regs would require that wellness programs that obtain medical information (either by inquiry or medical examinations/biometric testing) be reasonably designed to promote health. The Proposed Regs suggest this means, in part, that a program with a simple health risk assessment will need to have some follow-up mechanism (such as providing feedback about risk factors) that is reasonably designed to improve employee’s health.
  • For covered wellness programs that are part of a group health plan, employers must notify employees of the following:
    • what medical information is being obtained,
    • the purposes for which it is being obtained,
    • who gets the medical information,
    • the restrictions on how it will be disclosed, and
    • safeguards in place to prevent unauthorized disclosure.
  • The Proposed Regs do not address the application of the Genetic Information Nondiscrimination Act (GINA) to wellness programs, but expressly mention guidance on GINA will be forthcoming. Also, the Proposed Regs only address the ADA’s application to certain wellness programs regarding disability-related inquiries and medical examinations, thus, concerns such as those under Title VII and the ADEA linger.

If adopted, compliance with the “reasonable design” and “notice” requirements may prove more challenging than one initially thinks.  At a minimum, it would require employers to think through the goals and administration of wellness programs covered by the Proposed Regs, and whether those programs are part of a group health plan under ERISA. Employer should be reviewing their programs now to consider what effects the proposed rules would have on their programs, and perhaps whether to submit comments to help share the rules to address their concerns.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with…

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Mr. Lazzarotti also is a member of the firm’s Employee Benefits Practice Group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Mr. Lazzarotti counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Mr. Lazzarotti’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Mr. Lazzarotti speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Mr. Lazzarotti served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.