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EEOC proposes rules for workplace wellness financial incentives

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The U.S. Equal Employment Opportunity Commission on Thursday published a long-awaited set of proposed rules clarifying the agency's stance on the use of financial incentives within workplace wellness programs.

The proposed rules are meant to align nondiscrimination regulations under Title I of the Americans with Disabilities Act with recently enacted provisions of the Patient Protection and Affordable Care Act and the Health Information Portability and Accountability Act that loosened restrictions on the amount of money employers can use — either in the form of health insurance cost differentials or cash rewards and penalties — to drive employee participation and better health outcomes through a wellness program.

The rules would limit the dollar value of the financial incentives employers use within participatory and health contingent-based wellness programs to 30% of the total annual cost of self-only coverage under the employer's group health plan.

Financial incentives tied to smoking cessation programs would be limited to 50% of the total annual cost of self-only coverage.

“The EEOC worked closely with the departments of Labor, Health and Human Services, and Treasury in developing this notice of proposed rulemaking to harmonize the ADA's requirement that medical inquiries and exams that are part of an employee health program must be voluntary, and HIPAA's goal of allowing incentives to encourage participation in wellness programs,” EEOC Chairwoman Jenny R. Yang said in a statement.

The proposed rules reiterate that wellness programs will be treated as compliant with ADA regulations as long as participation in the program is voluntary, and provide employers with a more detailed view of what the EEOC deems to be a sufficiently voluntary program.

Under the proposed rules, employers would be prohibited from requiring employees to participate in a wellness program as a condition of their employment, and from taking any adverse employment action against employees who choose not to participate.

The proposed rules also would prohibit employers from denying employees access to health coverage under any of its group health plans — or to particular benefits packages within a group health plan — if they choose not to participate in a wellness program, nor could employers limit coverage for nonparticipating employees, except by way of imposing higher deductibles or other financial penalties.

“Employers can breathe a sigh of relief after the release of the proposed rules today,” Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington, said in an email.

“The EEOC has removed the cloud of uncertainty that has hung over employer-sponsored wellness programs since the EEOC's legal actions,” Mr. Wojcik said. “We applaud the EEOC for issuing the proposed rules that signal a unified government policy in support of wellness programs, which help employees improve their health and wellbeing.”

The proposed rules will be open for public comment until June 19, at which point the EEOC's board of commissioners will review the comments and make any necessary changes before issuing the final rules.