Corporate Wellness Program Incentives: Can Companies Use Financial Rewards to Incentivize Health Data Disclosure and Program Participation?

Corporate Wellness Program Incentives: Can Companies Use Financial Rewards to Incentivize Health Data Disclosure and Program Participation?

The following article is provided for educational and informational purposes only, and should not be construed as legal advice.  An attorney should be contacted for specific legal guidance.

On the surface, financial incentives to encourage employee participation in a corporate wellness program may sound like a no brainer.  Employees are rewarded for making healthier lifestyle choices. These choices,in turn, deliver tangible benefits to employers, like lower absenteeism rates and reduced health care costs. But there’s a catch: if your wellness program includes a health risk assessment (HRA) or biometric screening, you may need to adjust or eliminate the financial incentive or risk running afoul of a new EEOC ruling.

How ADA and GINA Applies to Corporate Wellness Programs

HRAs and biometric screenings are subject to the Americans with Disabilities Act (ADA) and/or the Genetic Information Nondiscrimination Act (GINA). Under the ADA and GINA, employee participation in a medical exam or health questionnaire must be “voluntary,” a term that is not defined under either law. And that’s the issue: at what point do financial incentives or penalties render behavior involuntary?

In 2016, the EEOC issued a new rule under ADA and GINA. The rules, as reported by SHRM, were as follows:

  • ADA: Employers could implement penalties or rewards of up to 30 percent of the cost of self-only coverage to encourage employees to disclose ADA-protected information, without causing the disclosure to be involuntary.
  • GINA: Similarly, employers could offer a 30 percent incentive to an employee to disclose certain genetic information that would not render the disclosure involuntary.

Understanding the EEOC Rule and District Court Ruling

AARP disagreed with the EEOC rule and filed a suit that the 30% incentive (or penalty) limit was simply too high. Employees who could not afford to pay such amounts would effectively be forced into providing their private health information, whether or not they wanted to share it. In Summer 2017, the court sided with AARP, holding that EEOC’s rule making had been arbitrary and did not include sufficient justification for the 30% limit or proof that the limit was not coercive. The court invited EEOC to issue new regulations or to provide evidence as to why the 30% rule is justified. Thus far, EEOC has only issued a rule affirming the District Court ruling and vacating the previous 30% rule. Confused by the rule making? You’re not alone.

Currently, it’s unclear if the previous financial incentive limit of 30% will ultimately be deemed coercive, rather than voluntary. The EEOC will not be issuing a revised ruling until June 2019 at the earliest. That’s left corporate wellness and benefits coordinators wondering what’s the safest course of action in 2019.

Structuring 2019 Corporate Wellness Programs: How Do ADA,GINA, HIPAA and ACA Apply?

While corporate wellness programs differ between workplaces,many have similar features aimed at reducing high-risk behavior. These wellness programs often start with biometric screening or HRA, which is a self-reported summary of health and behavior. Programs may include education initiatives focused on dietary and exercise interventions or smoking cessation. Finally,programs may integrate wearable technology to incentivize behavioral changes,like using a Fitbit to monitor daily exercise.

For employees who discover undiagnosed health issues, like high blood pressure, the program benefits are certainly significant. But one continued sticking point is an employee’s disclosure of private health information. Not all employees are eager to participate in a health risk assessment, especially if they do not believe they are unhealthy or would benefit from a behavioral change. Others are reluctant to share personal information with their employer and are concerned such information could be used against them.

That’s where HIPAA, ACA, HRA and GINA come into play. These different laws may sound a bit like alphabet soup, but if your corporate wellness plan fails to comply with applicable rules, your business could face stiff penalties.

  • ADA. The ADA prohibits discrimination based on a disability, and these rules apply to wellness programs that include a biometric screening or other medical exams.
  • GINA. GINA prohibits discrimination based on genetic information, and the EEOC considers a spouse’s family history to be genetic information. This means GINA applies if your program asks employees’ spouses to complete HRAs or other medical questionnaires.
  • HIPAA. HIPAA prohibits the discrimination in eligibility or premiums based on health-related factors but has exceptions for certain wellness programs.
  • ACA. The Affordable Care Act (ACA) amended HIPAA rules to allow a 30% maximum limit, plus an additional 20% for tobacco cessation programs.

Both ADA and GINA permit the collection of personal information as part of employer wellness plans, as long as an employee provides such information voluntarily.

Involuntary Disclosure Concerns: What’s an Acceptable Incentive or Penalty?

The short answer is: we don’t know. Until EEOC issues a new rule, corporate wellness and benefits coordinators are without a clear answer.This leaves many in a Catch-22 for 2019: continue with past incentive/penalty structures and risk being on the wrong side of the next EEOC rule, or discontinue the incentive/penalty structure altogether.

There may be a third way that’s safest: offer a wellness program that does not fall under ADA/GINA purview. Here are a few examples:

  • Smoking cessation: A tobacco cessation program that does NOT test for the presence of nicotine and only asks participants to self-report tobacco use. This program only falls under HIPAA-ACA limits so companies could impose incentive/penalty up to 50% (30% + 20% for tobacco).
  • Outcome-based, participatory wellness program: Programs that require participants meet a specific outcome, like obtaining a certain score on a health quiz (but no biometric or HRA requirement). This program only falls under HIPAA-ACA limits so companies could impose incentive/penalty up to 30%.
  • Non-outcome-based, participatory wellness program: Programs based solely on participation, like attending a health seminar, completing a healthy eating challenge, or self-reporting the number of steps walked per day, regardless of the outcome. This program is not subject to HIPAA-ACA, ADA or GINA, so companies can choose an incentive or penalty of any amount. However, keep in mind that non-outcome based, participatory programs are also the least statistically effective at achieving desired wellness goals.

Until the EEOC issues a new rule, companies must decide the safest course of action. With 2019 well underway,

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Scott Foster is President of Wellco. Scott and Wellco have provided award-winning systems to measurably improve health engagement and outcomes. Wellco specializes in engagement, analytics and high-value care.  

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