Companies With Wellness Plans Avoid ADA Lawsuits by Telling Employees What Medical Information Will Be Collected and How It Will Be Used and Kept Confidential

Companies with wellness programs that offer financial incentives and collect medical information or require medical exams will soon have to provide their employees notice about what medical information will be collected and how it will be used and kept confidential.  Otherwise, the company will be subjected to ADA discrimination suits.[1]  On May 17, 2016, the Equal Employment Opportunity Commission (“EEOC”) published its final rule permitting employers to offer financial incentives to encourage employees to participate in the company’s voluntary employee health programs covered by Title I of the Americans with Disabilities Act (“ADA”),[2] provided the company gives their employees notice regarding information collected as part of participating in the wellness program (the “ADA Rule”).  This article analyzes the ADA Rule’s notice requirements and its impact on employers.

The ADA Rule Notice Requirement

The ADA Rule permits companies to offer financial incentives, such as discounts on insurance premiums, to employees if the employees participate in a company, voluntary health wellness program.  An employee health program includes any disability-related inquiries or medical examinations required as part of the program, that is “reasonably designed to promote health or prevent disease.”[3]  To be “voluntary,” the wellness program must: (1) not require employee participation; (2) not deny coverage under group health plans or benefit packages for non-participation or limit benefits for employees who do not participate; (3) the company cannot take any adverse employment action or retaliate against an employee who does or does not participate; and (4) provide employees notice about the medical information collected as part of the wellness program, including what medical information will be collected and how the medical information will be used and kept confidential.[4]

The ADA Rule’s notice requirement does not apply to wellness programs that provide adequate notice to employees through other statutes, such as the Health Insurance Portability and Accountability Act (“HIPAA”).[5]  There is no set format for providing notice to employees as long as the notice effectively reaches all employees being offered the opportunity to participate in the wellness program.[6] 

This new rule takes effect January 1, 2017 and companies must comply—i.e. provide—the notice on the first day of the covered health plan year beginning on or after January 1, 2017 (the “effective date”).[7]  After the effective date, new employees must receive the notice before they provide any health information.  They must also be given sufficient time to consider whether to participate in the employer’s wellness program.  To assist employers with complying with the notice requirement, the EEOC posted a sample notice that employers may customize as necessary, which is available at: https://www1.eeoc.gov//laws/regulations/ada-wellness-notice.cfm.

Impact on Employers

Employers who offer financial incentives for wellness programs must develop an appropriate notice; consider how to provide the required notice to their employees; and ensure the notice complies with the ADA Rule by at least January 1, 2017, to avoid being subjected to ADA discrimination claims resulting from the wellness program.  Employers should also consult with labor and employment counsel to ensure their notice complies with the ADA Rule’s requirements.

 

[1] Under the ADA, employers may not ask disability-related inquiries or require medical examinations.  42 U.S.C. §12112(d)(4)(A).  However, the ADA provides an exception to this general rule for voluntary employee health programs.  42 U.S.C. § 12112(d)(4)(B).

[2] Kevin McGowan, EEOC Issues Final Rules on Wellness Plan Incentives, Bloomberg BNA Daily Labor Report (May 16, 2016).  The EEOC also published similar rules amending Genetic Information Nondiscrimination Act (“GINA”) regulations.

[3] See 29 C.F.R. § 1630.14(d)(1).  To satisfy this standard the program must have “a reasonable chance of improving the health of, or preventing disease in, participating employees, and it is not overly burdensome, is not a subterfuge for violating the ADA . . . and is not highly suspect in the method chosen to promote health or prevent disease.”

[4] See 29 C.F.R. § 1630.14(d)(2).  To satisfy the notice requirement, employers must: (1) write the notice to ensure the employee is reasonably likely to understand it; (2) describe the type of medical information that will be obtained; (3) the purposes for using the medical information; and (4) how the medical information will be kept confidential.

[5] EEOC, Questions and Answers: Sample Notice for Employees Regarding Employer Wellness Programs, EEOC (June 16, 2016) (https://www1.eeoc.gov//laws/regulations/qanda-ada-wellness-notice.cfm) (last visited June 23, 2016).

[6] Id.

[7] Kevin McGowan, EEOC Posts Sample Notice for Wellness Programs, Bloomberg BNA Daily Labor Report (June 16, 2016).

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