Wellness Plans: What Is Going On? BY: TINA HALEY AND SARAH R. JOHNSON Holifield Janich & Associates, PLLC Kingston Pike Suite 201 Knoxville, TN Phone: (865) Fax: (865)

51% of firms with 200 workers or more offer incentives for employees to complete health risk assessments 36% of firms with more than 200 workers use financial incentives tied to health objectives like weight loss and smoking cessation 18% of firms over all use financial incentives tied to health objectives like weight loss and smoking cessation See Rand Corporation, “Do Workplace Wellness Programs Save Employers Money?” (2014); The Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits 2014 Annual Survey 6; 4/RAND_RB9744.pdf 4/RAND_RB9744.pdf Wellness Plans: Who Has Them?

1. The Health Insurance Portability and Accountability Act (HIPAA), which prohibits employer-sponsored group health plans from discriminating against an employee on the basis of the employee’s (or a family member’s) adverse health factors; 2. The Americans with Disabilities Act, as amended by the ADA Amendments Act of 2008 (ADA) which prohibits discrimination against a qualified individual with a disability in any aspect of employment; and Wellness Plans: What Laws Apply ?

3. Title II of the Genetic Information Nondiscrimination Act (GINA), which protects job applicants, current and former employees, labor union members, and apprentices and trainees from employment discrimination based on their genetic information. 4. Patient Protection and Affordable Care Act of 2010 (ACA) also figures prominently. Wellness Plans: What Laws Apply?

Final regulations were issued jointly by Department of Treasury, Department of Labor, and Health and Human Services on June 3, 2013 Final regulations apply to plan years beginning on or after January 1, 2014 Types of Wellness Plans: ◦ Participatory Wellness Plans ◦ Health-Contingent Wellness Plans ◦ Activity-Only Wellness Plans ◦ Outcome-Based Wellness Plans Wellness Plans: HIPAA & ACA

A wellness program is a program of health promotion or disease prevention 1996: HIPAA added provisions to the IRC, ERISA, and PHS Act prohibiting group health plans and group health insurers from discriminating against individual participants and beneficiaries in eligibility, benefits, or premiums based on a health factor ◦ Exception: Premium discounts or rebates or modification to otherwise applicable cost sharing (including copayments, deductibles, or coinsurance) in return for adherence to certain programs Wellness Plans: HIPAA & ACA

2006 – Final regulations were issued implementing HIPAA nondiscrimination and wellness provisions 2010 – ACA amended the PHS Act (but not ERISA or IRC) ◦ Added nondiscrimination and wellness provisions which largely reflected the 2006 regulations and extended HIPAA nondiscrimination protections to the individual market ◦ Wellness program exception to prohibition on discrimination applies with respect to group health plans (and any health insurance coverage offered in connection with such plans) but does not apply to coverage in the individual market Wellness Plans: HIPAA & ACA

Genetic Information Nondiscrimination Act Section 202(b) (b) Acquisition of Genetic Information.--It shall be an unlawful employment practice for an employer to request, require, or purchase genetic information with respect to an employee or a family member of the employee except-- (1) where an employer inadvertently requests or requires family medical history of the employee or family member of the employee; (2) where-- (A) health or genetic services are offered by the employer, including such services offered as part of a wellness program;

Genetic Information Nondiscrimination Act Section 202(b) (B) the employee provides prior, knowing, voluntary, and written authorization; (C) 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 result of such services; and

Genetic Information Nondiscrimination Act Section 202(b) (D) any individually identifiable genetic information provided under subparagraph (C) in connection with the services provided under subparagraph (A) 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; and (E) the employer, excluding any licensed health care professional or board certified genetic counselor that is involved in the genetic monitoring program, receives the results of the monitoring only in aggregate terms that do not disclose the identity of specific employees

Americans with Disabilities Act (“ADA”) Does my Wellness Program have to comply with the ADA? If so, which parts? Yes – Wellness Programs must comply with certain sections of the ADA.

ADA Section 102(d)(4): Exams & Inquiry (4) Examination and inquiry. - (A) Prohibited examinations and inquiries. - A covered entity shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job­ related and consistent with business necessity. (B) Acceptable examinations and inquiries. - A covered entity may conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that work site. A covered entity may make inquiries into the ability of an employee to perform job­-related functions.

ADA Section 503(a) and (b): Retaliation & Coercion Prohibition against retaliation and coercion (a) Retaliation No person shall discriminate against any individual because such individual has opposed any act or practice made unlawful by this chapter or because such individual made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter. (b) Interference, coercion, or intimidation It shall be unlawful to coerce, intimidate, threaten, or interfere with any individual in the exercise or enjoyment of, or on account of his or her having exercised or enjoyed, or on account of his or her having aided or encouraged any other individual in the exercise or enjoyment of, any right granted or protected by this chapter.

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 No changes under final regulations ◦ Still must be made available to all similarly situated individuals regardless of health status Examples: ◦ Filling out a health risk assessment or having a diagnostic test performed ◦ Attending a monthly, no-cost health education seminar ◦ Program that reimburses employees for all or part of the cost of membership in a fitness center Participatory Wellness Plans

A program that requires an individual to satisfy a standard related to a health factor to obtain a reward (or requires an individual to undertake more than a similarly situated individual based on a health factor in order to obtain the same reward) Two types: ◦ Activity-only wellness programs ◦ Outcome-based wellness programs Health-Contingent Wellness Plan

Five requirements for health-contingent wellness programs: ◦ Opportunity to Qualify ◦ Size of Reward ◦ Reasonable Design ◦ Uniform Availability ◦ Notice of Alternative Standard Health-Contingent Wellness Plan

A type of health-contingent wellness program that requires an individual to perform or complete an activity related to a health factor in order to obtain a reward but does not require the individual to attain or maintain a specific health outcome ◦ Examples: ◦ Walking ◦ Diet ◦ Exercise programs Activity-Only Wellness Plan

A type of health-contingent wellness program that requires an individual to attain or maintain a specific health outcome in order to obtain a reward Examples ◦ Not smoking ◦ Attaining certain results on biometric screenings Outcome-Based Wellness Plan

Plans and issuers must disclose the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard) in all plan materials describing the terms of a health-contingent wellness program Outcome-based wellness programs must also include this notice in any disclosure that an individual did not satisfy an initial outcome-based test What must be included: ◦ Contact information for obtaining the alternative ◦ Statement that recommendations of an individual’s personal physician will be accommodated Notice of Availability of Reasonable Alternative Standard

Activity-Only Wellness Programs Outcome-Based Wellness Programs Opportunity to QualifyAt least once per year Size of the RewardLimited to 30% of the cost of coverage Limited to 30% of the cost of coverage, plus an additional 20% for non- tobacco use Reasonable Design Must not be overly burdensome or a subterfuge for discrimination based on health status. Must offer a reasonable alternative standard to qualify for the reward to every individual who does not meet the initial standard Health Contingent Wellness Plan Requirements

Activity-Only Wellness Programs Outcome-Based Wellness Programs Uniform AvailabilityAn alternative to qualify for the full reward (or waiver of standard) must be offered if activity would be medically inadvisable or unreasonable due to a medical condition. An alternative to qualify for the full reward (or waiver of the standard) must be offered to individuals who do not meet the initial standard. Notice of Alternative StandardMust provide notice of availability of alternative standard in all materials describing the program. Notice must include contact info and statement that recommendations from the individual’s physician will be accommodated. Must provide notice of availability of alternative standard in all materials describing the program and in disclosures that individual did not satisfy the initial outcome- based standard. Notice must include contact info and statement that recommendations from the individual’s physician will be accommodated. Health Contingent Wellness Plan Requirements

EEOC Lawsuits In 2014 the EEOC filed three causes of action against three different employers regarding their wellness plans. EEOC v. Orion Energy Systems (Eastern District of Wisconsin, Aug. 20, 2014) EEOC v. Flambeau, Inc. (Western District of Wisconsin, Oct. 1, 2014) EEOC v. Honeywell International (District Court of Minnesota, Oct. 27, 2014)

What is the litigation about? Americans With Disabilities Act Genetic Information Nondiscrimination Act The Affordable Care Act HIPAA/HITECH

What are the implications of these cases and regulations?

EEOC Final Rules on Wellness Plans Effective Date: First day of the first plan year that begins on or after January 1, 2017 ADA final rule – the wellness program must be reasonably designed to promote health or prevent disease and must be voluntary ◦ The program must have “a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.”

EEOC Final Rules on Wellness Plans: Voluntary Plan The program must be voluntary: ◦ Employer cannot require employee participation in the program ◦ Employer cannot deny coverage under any of its group health plans (or in a particular benefits package within its plan) for an employee not participating in the wellness program ◦ Employer cannot take an adverse employment action or retaliate against, interfere with, coerce, intimidate or threaten employees who do not participate in the wellness program ◦ Employers are only permitted to receive medical information as part of the wellness program in the aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals

EEOC Final Rules on Wellness Plans: Confidentiality Notice Employers must provide participants with a confidentiality notice containing the following information: ◦ A clear explanation of what medical information will be obtained ◦ How the obtained medical information will be used ◦ Who will receive the medical information ◦ Restrictions on disclosure of the obtained medical information ◦ Methods the employer will use to prevent improper disclosure of the medical information © HOLIFIELD JANICH & ASSOCIATES, PLLC

EEOC Final Rules on Wellness Plans: Limits on Financial Incentives Limits on financial incentives that a wellness program can offer under the ADA final rule, if the program involves a medical examination: ◦ If the employer offers only one group health plan and participation in a wellness program is offered only to employees that are enrolled in the plan, 30% of the total cost of self-only coverage (including both the employee’s and employer’s contribution) of the group health plan; ◦ If the employer offers only one group health plan and participation in a wellness program is offered to all employees regardless of whether they are enrolled in the plan, 30% of the total cost of self- only coverage under the covered entity’s group health plan;

EEOC Final Rules on Wellness Plans: Limits on Financial Incentives ◦ If the employer offers more than one group health plan and participation in a wellness program is offered to all employees regardless of whether they are enrolled in a particular plan, 30% of the total cost of the lowest cost self-only coverage under a major medical group health plan; and ◦ If the covered entity does not offer a group health plan or group health insurance coverage, 30% of the cost of self-only coverage under the second lowest cost Silver Plan for a 40-year-old nonsmoker on the state or federal health care Exchange in the location that the covered entity identifies as its principal place of business ◦ When analyzed with the HIPAA regulations, a program that is designed to prevent or reduce tobacco use that does not include a medical examination may offer an incentive up to 50% of the cost of coverage for participation in the program © HOLIFIELD JANICH & ASSOCIATES, PLLC

EEOC Final Rules on Wellness Plans: ADA Safe Harbor Does Not Apply ADA “Safe Harbor” Provision does not apply to wellness programs ◦ Provision that allows insurers and plan sponsors to use information about risks posed by certain health conditions to make decisions about insurability and the cost of insurance does not apply to wellness plans

EEOC Final Rules on Wellness Plans: GINA Final Rule GINA final rule – Incentives cannot be offered in exchange for health information about employees’ spouses or children ◦ Exception: employers may seek health information from a family member who is receiving health or genetic services offered by the employee ◦ Employers may offer health or genetic services (i.e. participation in a wellness program) to an employee’s children on a voluntary basis, but cannot offer any inducement in exchange for information about a disease or disorder in the child

EEOC Final Rules on Wellness Plans: Limits on Financial Incentives - Spouses Limits on financial incentives that a wellness program can offer for a spouse to provide information about his or her health status: ◦ If a wellness program is open to only employees and family members in a particular group health plan, 30% of the total cost of self-only coverage under such group health plan; ◦ If the employer provides more than one group health plan and enrollment in a particular plan is not required to participate in the wellness program, 30% of the lowest cost major medical cost of self-only plan the employer offers; and

EEOC Final Rules on Wellness Plans: Limits on Financial Incentives - Spouses ◦ If the employer does not offer a group health plan, 30% of the total cost to a 40-year-old non-smoker purchasing coverage under the second lowest cost Silver Plan available through the state or federal exchange in the location the employer has identified as its principal place of business.