Post­ed by Jen­nifer Kupper

HeatAs men­tioned in the first post­ing, well­ness pro­grams must be ana­lyzed under a myr­i­ad of laws and reg­u­la­tions. This post will dis­cuss gen­er­al­ly the well­ness pro­gram land­scape in light of the Amer­i­cans with Dis­abil­i­ties Act (ADA)/Americans with Dis­abil­i­ties Act Amend­ments Act (ADAAA), the Genet­ic Infor­ma­tion Non-Dis­crim­i­na­tion Act (GINA), the Patient Pro­tec­tion and Afford­able Care Act (PPACA), and the Health Insur­ance Porta­bil­i­ty and Account­abil­i­ty Act of 1996 (HIPAA) and the Nondis­crim­i­na­tion Reg­u­la­tions. This is a 30,000-foot overview of laws and reg­u­la­tions that are in need of micro­scop­ic scruti­ny when apply­ing them to a well­ness program.


The ADA/ADAAA gen­er­al­ly pro­hibits dis­crim­i­na­tion in employ­ment against a qual­i­fied indi­vid­ual on the basis of a dis­abil­i­ty in regard to employ­ee com­pen­sa­tion and oth­er terms, con­di­tions, and priv­i­leges of employ­ment. Fur­ther is a pro­hi­bi­tion from requir­ing a med­ical exam­i­na­tion and mak­ing inquiries of an employ­ee as to whether he or she has a dis­abil­i­ty, or as to the nature or sever­i­ty of a dis­abil­i­ty, unless such exam­i­na­tion or inquiry is shown to be job-relat­ed and con­sis­tent with busi­ness necessity.

How­ev­er, there is a statu­to­ry safe har­bor that exempts cer­tain insur­ance plans from the ADA’s gen­er­al pro­hi­bi­tions. The “ben­e­fit plan excep­tion” states that the ADA shall not be con­strued as pro­hibit­ing an employ­er from estab­lish­ing, spon­sor­ing, observ­ing, or admin­is­ter­ing the terms of a bona fide ben­e­fit plan that are based on under­writ­ing risks, clas­si­fy­ing risks, or admin­is­ter­ing such risks that are based on, or not incon­sis­tent with, state law or where the plan is not sub­ject to state law (a self-fund­ed ben­e­fit plan) so long as the exemp­tion is not used as a sub­terfuge for dis­crim­i­na­tion. As such, vol­un­tary med­ical exam­i­na­tions and/or his­to­ries, which are part of a group well­ness pro­gram, are per­mis­si­ble so long as strict con­fi­den­tial process­es are followed.

What does it mean to be vol­un­tary? There is no short answer, but the abbre­vi­at­ed answer is that a well­ness pro­gram may be vol­un­tary if the employ­er nei­ther requires par­tic­i­pa­tion, nor penal­izes employ­ees who do not par­tic­i­pate. The U.S. Equal Employ­ment Oppor­tu­ni­ty Com­mis­sion (EEOC) once posit­ed that a health reim­burse­ment arrange­ment (HRA) admin­is­tered as part of a well­ness pro­gram that meets the incen­tive lim­i­ta­tions of HIPAA well­ness reg­u­la­tions – no more than a (then) 20% reward – would be deemed vol­un­tary and would not vio­late the ADA. Unfor­tu­nate­ly, this por­tion of the opin­ion let­ter was with­drawn because it was out­side the scope of the request. The posi­tion cur­rent­ly held by the EEOC is that an incen­tive is a veiled penal­ty, which, in essence, makes the pro­gram invol­un­tary and, thus, vio­lates the ADA. How­ev­er, this is in con­flict with the “ben­e­fit plan excep­tion,” not­ed above.


Gen­er­al­ly, GINA pro­hibits both the acqui­si­tion of genet­ic infor­ma­tion as well as the use of genet­ic infor­ma­tion by employ­ers in employ­ment deci­sions. As it applies to group health plans, Title I pro­hibits dis­crim­i­na­tion in health insur­ance pre­mi­ums based on genet­ic infor­ma­tion and places lim­i­ta­tions on genet­ic test­ing and the col­lec­tion of genet­ic infor­ma­tion. Title II pro­hibits the use of genet­ic infor­ma­tion in the employ­ment con­text, restricts employ­ers from request­ing, requir­ing, or pur­chas­ing genet­ic infor­ma­tion, and strict­ly lim­its employ­ers from dis­clos­ing genet­ic information.

In gen­er­al, Title II lim­its the con­di­tions under which an employ­er might law­ful­ly col­lect genet­ic infor­ma­tion pur­suant to an employ­er-spon­sored well­ness pro­gram and it requires those employ­ers to fol­low strict pri­va­cy and con­fi­den­tial­i­ty man­dates. Under GINA, it is unlaw­ful for an employ­er to request, require, or pur­chase genet­ic infor­ma­tion with respect to an employ­ee or an employee’s fam­i­ly mem­ber. There is an excep­tion if the infor­ma­tion is part of a well­ness pro­gram, sub­ject to strict adher­ence of the fol­low­ing three requirements:

  1. The employ­ee pro­vides pri­or, know­ing, vol­un­tary, and writ­ten authorization;
  2. Only the employ­ee (or fam­i­ly mem­ber if the fam­i­ly mem­ber is receiv­ing genet­ic ser­vices) and the licensed health care pro­fes­sion­al, or board cer­ti­fied genet­ic coun­selor involved in pro­vid­ing such ser­vices, receive indi­vid­u­al­ly iden­ti­fi­able infor­ma­tion con­cern­ing the results of such ser­vices; and
  3. Any indi­vid­u­al­ly iden­ti­fi­able genet­ic infor­ma­tion pro­vid­ed in con­nec­tion with the ser­vices is only avail­able for pur­pos­es of such ser­vices and shall not be dis­closed to the employ­er except in aggre­gate terms that do not dis­close the iden­ti­ty of spe­cif­ic employees.

Again, what does it mean to be vol­un­tary? In the pre­am­ble to the 2010 final reg­u­la­tions imple­ment­ing Title II, the EEOC con­clud­ed that a well­ness pro­gram is vol­un­tary if the pro­gram nei­ther requires par­tic­i­pa­tion, nor penal­izes employ­ees for non-par­tic­i­pa­tion. The EEOC con­clud­ed that it would not vio­late Title II for an employ­er to offer indi­vid­u­als an induce­ment for com­plet­ing an HRA that includes ques­tions about fam­i­ly med­ical his­to­ry, or oth­er genet­ic infor­ma­tion, as long as the employ­er specif­i­cal­ly iden­ti­fies those ques­tions and makes clear, in lan­guage rea­son­ably like­ly to be under­stood by those com­plet­ing the HRA, that the indi­vid­ual need not answer the ques­tions that request genet­ic infor­ma­tion in order to receive the induce­ment. The EEOC specif­i­cal­ly declined to take the approach tak­en in HIPAA reg­u­la­tions – no more than a (then) 20% reward – and, instead, added that adher­ence to Title II of GINA does not guar­an­tee adher­ence to Title I of GINA, ADA, or HIPAA.


The gen­er­al rule pur­suant to HIPAA nondis­crim­i­na­tion pro­vi­sions is that a plan or issuer is pro­hib­it­ed from charg­ing sim­i­lar­ly sit­u­at­ed indi­vid­u­als dif­fer­ent pre­mi­ums or con­tri­bu­tions on the basis of a “health fac­tor.” How­ev­er, there is an excep­tion to the gen­er­al rule if the reward, i.e., pre­mi­um dis­count, is based on par­tic­i­pa­tion in a pro­gram rea­son­ably designed to pro­mote health or pre­vent dis­ease, i.e., a “well­ness program.”

When ana­lyz­ing a well­ness pro­gram under PPACA and HIPAA, the first step is to deter­mine whether the well­ness pro­gram – or, as it may be the case, which part of the well­ness pro­gram – is “par­tic­i­pa­to­ry” or “health-con­tin­gent.” Par­tic­i­pa­to­ry well­ness pro­grams are not required to fol­low HIPAA nondis­crim­i­na­tion pro­vi­sions, dis­cussed below. How­ev­er, and to the point of this blog series, par­tic­i­pa­to­ry (and health-con­tin­gent) well­ness pro­grams should be reviewed and scru­ti­nized against the pro­vi­sions of GINA, ADA, the Employ­ee Retire­ment Income Secu­ri­ty Act (ERISA), Inter­nal Rev­enue Code (IRC), and oth­er fed­er­al and state laws.

Par­tic­i­pa­to­ry well­ness pro­grams are defined under HIPAA nondis­crim­i­na­tion final reg­u­la­tions as pro­grams that either do not pro­vide a reward, or do not include any con­di­tions for obtain­ing a reward that are based on an indi­vid­ual sat­is­fy­ing a stan­dard that is relat­ed to a health fac­tor. Exam­ples include a pro­gram that reim­burs­es employ­ees for all or part of the cost of mem­ber­ship in a fit­ness cen­ter, a diag­nos­tic test­ing pro­gram that pro­vides a reward for par­tic­i­pa­tion and does not base any part of the reward on out­comes, and a pro­gram that pro­vides a reward to employ­ees for attend­ing a month­ly, no-cost health edu­ca­tion seminar.

If the well­ness pro­gram, or a piece of the well­ness pro­gram, is par­tic­i­pa­to­ry, it does not have to fol­low HIPAA nondis­crim­i­na­tion reg­u­la­tions. How­ev­er, if the well­ness pro­gram, or a por­tion there­of, is health-con­tin­gent, then the pro­gram must be ana­lyzed pur­suant to HIPAA nondis­crim­i­na­tion regulations.

HIPAA Nondis­crim­i­na­tion Pro­vi­sions and the Well­ness Pro­gram Exception

Health-con­tin­gent well­ness pro­grams, in con­trast to par­tic­i­pa­to­ry pro­grams, require an indi­vid­ual to sat­is­fy a stan­dard relat­ed to a health fac­tor to obtain a reward or require an indi­vid­ual to under­take more than a sim­i­lar­ly sit­u­at­ed indi­vid­ual based on a health fac­tor in order to obtain the same reward. The stan­dard may be per­form­ing or com­plet­ing an activ­i­ty relat­ing to a health fac­tor, or it may be attain­ing or main­tain­ing a spe­cif­ic health out­come. The final reg­u­la­tions fur­ther sub­di­vid­ed health-con­tin­gent pro­grams into (1) activ­i­ty-only well­ness pro­grams, and (2) out­come-based well­ness pro­grams. While there are some dif­fer­ences, both types are per­mis­si­ble only if the pro­gram adheres to the five prongs:

  1. Be rea­son­ably designed to pro­mote health or pre­vent dis­ease (the same rules apply to activ­i­ty-only and out­come-based programs);
  2. Give employ­ees a chance to qual­i­fy for the incen­tive at least once a year (the same rules apply to activ­i­ty-only and out­come-based programs);
  3. Cap the reward or penal­ty at 50% of the total cost of cov­er­age for avoid­ing tobac­co and at 30% for all oth­er types of well­ness incen­tives (the same rules apply to activ­i­ty-only and out­come-based programs);
  4. Pro­vide an alter­na­tive way to qual­i­fy for the incen­tive for those who have med­ical con­di­tions (dif­fer­ent rules apply to activ­i­ty-only and out­come-based pro­grams); and
  5. Describe the avail­abil­i­ty of the alter­na­tive method of qual­i­fy­ing for the incen­tive in writ­ten pro­gram mate­ri­als (the same rules apply to activ­i­ty-only and out­come-based programs).

These rules set forth cri­te­ria for an affir­ma­tive defense that can be used by plans and issuers in response to a claim that the plan or issuer dis­crim­i­nat­ed under HIPAA nondis­crim­i­na­tion provisions.

This is not the end…

The above is mere­ly a gen­er­al overview of the innate ten­sion cre­at­ed by con­flict­ing reg­u­la­tions, com­pound­ed by the lack of guid­ance from the com­mis­sion, which is con­fronting con­cerned employ­ers who have cho­sen to be proac­tive in com­bat­ing the costs of health care and improv­ing con­sumers’ lives. The next part of the series will dis­cuss the move­ments in the courts, the back­lash felt by the EEOC, and steps employ­ers should take.

For more data on well­ness pro­grams and oth­er plan design trends, down­load the 2014 Health Plan Exec­u­tive Sum­ma­ry. This sur­vey – which has been con­duct­ed every year since 2005 – is the nation’s largest health plan sur­vey and pro­vides more accu­rate bench­mark­ing data than any oth­er source in the indus­try. You can con­tact a UBA Part­ner Firm for a cus­tomized bench­mark report based on indus­try, region and busi­ness size.

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