1 Many Federal Agencies Are Involved in PPACA and Three Have Issued - PDF document

Workplace Wellness Programs - Healthy for Idaho Employers Patricia M. Olsson SHRM Idaho 2016 Employment Law Conference September 30, 2016 www.moffatt.com PATRICIA M. OLSSON Ms. Olsson’s practice emphasizes employment, health care law, and medical malpractice defense. Since 1983 she has tried numerous cases before state and federal trial courts and has conducted an active appellate practice in the federal and state courts of appeals. Ms. Olsson was inducted into the American College of Trial Lawyers in October 2003, and served as Idaho State Chair for three years. Where Did the Idea of Employee Wellness Programs Originate? • The Patient Protection and Affordable Care Act (“PPACA”) (also known as Obamacare) intends to improve the health of all Americans. • It does this by trying to incent physicians and extended care providers from the “fee-for-service” model that has held so long, to a situation where they will be rewarded if they keep their regional population healthy. Example: The Treasure Valley YMCA has a program called The Healthy Living Center . It is a partnership between the Treasure Valley YMCA, area health organizations, and the community, including employers. But: 9/30/2016 3 1

Many Federal Agencies Are Involved in PPACA and Three Have Issued Guidelines, Working Together, for Wellness Programs • These departments are the Internal Revenue Service (“IRS”), the Department of Labor (“DOL”), and the Department of Health & Human Services (“DHHS”), hereinafter referred to as “the Tri- Agencies.” • The regulations they developed can be found at 26 C.F.R. pt. 54 (IRS), 29 C.F.R. pt. 2590 (DOL), and 45 C.F.R. pts. 146 and 147 (DHHS). • A good source for reviewing these regulation is https://www.law.cornell.edu. 9/30/2016 4 The Rule of the Tri-Agencies: • 26 C.F.R. pt. 54 (IRS) • 29 C.F.R. pt. 2590 (DOL) • 45 C.F.R. pts. 146 and 147 (DHHS) SUMMARY: The final regulations, consistent with the Affordable Care Act, regarding nondiscriminatory wellness programs in group health coverage, provide: • These final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health 2 insurance coverage) from 20 percent to 30 percent of the cost of coverage. 9/30/2016 5 The Rule of the Tri-Agencies (Cont’d) These regulations also include other clarifications • regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination. • Lastly, these regulations also include other clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination. 9/30/2016 6 2

What Does the EEOC Think About Wellness Programs? • The EEOC also regulates employer wellness programs. • On April 20, 2015, the EEOC issued a Notice of Proposed Rulemaking. • On May 17, 2016, the EEOC issued its final rule and an Interpretative Guidance implementing Title I of the Americans with Disabilities Act (“ADA”) as they relate to employer wellness programs. • This rule becomes effective January 1, 2017. 9/30/2016 7 The EEOC’s Definition of a Wellness Program • Wellness program generally refers to health promotion and disease prevention programs and activities offered to employees as part of an employer-sponsored group health plan, or separately as a benefit of employment. • Many programs ask employees about their medical history to perform a Health Risk Assessment (“HRA”), and/or have their employees undergo biometric screenings for risk factors. • Other wellness programs provide education on various things, including nutrition, weight loss, smoking cessation, and coaching employees to meet health goals. 9/30/2016 8 What Is the Basis for the EEOC’s Purported Jurisdiction Over Employer Wellness Programs? • Title I of the ADA prohibits discrimination against individuals on the basis of disability. • Effective January 1, 2009, the definition of a “disability” was so broadly expanded that almost everyone has a disability of one kind or another. • The ADA also restricts employers from obtaining medical information from applicants and employees, although it does allow post-offer physical examinations . 9/30/2016 9 3

How Does This Pertain to Wellness Programs? • Employers can only inquire about their employees’ health or do medical exams in conjunction with a wellness program if it is a voluntary employee health program. • According to the EEOC, Title I of the ADA prohibits employers from denying employees access to wellness programs on the basis of disability. • It requires employers to provide reasonable accommodations that allow employees with disabilities to participate in wellness programs. • All medical information gathered as a part of the wellness program is confidential. 9/30/2016 10 The EEOC’s Reason for Issuing Its Own Rules • Although PPACA involves the IRS, the DOL, and the DHHS, as well as the EEOC, the EEOC chose to go its own way in developing its regulations. • These regulations conflict with the regulations agreed upon and issued by the Tri-Agencies. • The EEOC stated that while it would try to provide consistency with HIPAA and PPACA, it determined that employers’ wellness programs had to be voluntary, and incentives to participate could not be so high as to become coercive. 9/30/2016 11 What Can an Employer Do Under an EEOC Program? • Offer voluntary wellness programs. • These wellness programs can be part of an employer- sponsored group health plan. • That health plan can offer incentives for “health-contingent” wellness programs. • Such programs may offer rewards to employees who perform certain activities or achieve health outcomes, or impose penalties if they do not perform an activity or fail to achieve a particular outcome. 9/30/2016 12 4

What Can an Employer Do Under an EEOC Program? (Cont’d) • No incentive limits are placed on participatory programs (such as programs that only ask employees to complete an HRA or attend a smoking cessation class), so long as these programs are offered to all employees and incentives are available to all employees regardless of a health factor. 9/30/2016 13 Limits Placed by the EEOC • The EEOC’s final rule interpreting the ADA clearly limits incentives that apply to any bonus program that requires employees to answer disability-related questions or undergo medical examinations (whether they are participatory or health contingent). • Incentives include both financial and in-kind incentives (such as reduction in insurance premiums, cash, time off awards, prizes and other items of value, even including “trinket” gifts). 9/30/2016 14 Does This Rule Apply to Wellness Programs That Are Not Part of an Employer’s Group Health Plan? • According to the EEOC, it does. • The EEOC’s Interpretation of the ADA is that there is no distinction between wellness programs that are a part of a group health plan or simply offered by the employer. • Its regulations require all wellness programs that obtain medical information from employees to be voluntary. • Note that HIPAA’s regulations concerning wellness programs applies only to those that are offered as a part of a group health plan. See : https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our- activities/resource-center/publications/caghipaaandaca.pdf . 9/30/2016 15 5

ADA “Safe Harbor” Applicable to Insurance • According to the EEOC, the ADA’s Safe Harbor provision allows insurers and plan sponsors, including employers, to use information about employees’ health conditions to make decisions about insurability and the cost of insurance. • The inquiries and use of the information have to be consistent with laws governing insurance, and cannot be a subterfuge to evade compliance with the ADA. • The Safe Harbor provision does not apply to employer wellness programs. Why not? 9/30/2016 16 ADA “Safe Harbor” Applicable to Insurance (Cont’d) • Because employer wellness programs are not collecting or using information to determine whether employees with certain health conditions are insurable or to set insurance premiums, the Safe Harbor, according to the EEOC, does not apply. • The final regulation explicitly states the Safe Harbor provision does not apply to wellness programs even if they are part of an employer’s health plan. 9/30/2016 17 What Standards Apply to the Voluntary Wellness Programs the EEOC Has Determined Are Allowable Under the ADA? • If an employer is offering a voluntary employee health program, any disability-related inquiries or medical examinations that are a part of the wellness program must be “reasonably designed to promote health or prevent disease.” • The program cannot require an overly burdensome amount of time for participation. • The program may not involve unreasonably intrusive procedures. • The program cannot require employees to incur significant costs for medical examinations. 9/30/2016 18 6