Wellness program incentives must not be too high
Employee wellness programs are popular but must comply with both the federal Americans with Disabilities Act (ADA) and the Health Insurance Privacy and Accountability Act (HIPAA), including incentive provisions.
As part of prohibiting discrimination based on disabilities, the ADA restricts when employers may ask medical questions or require medical exams of employees — all employees, not just those with disabilities.
If, however, employers have a voluntary wellness program, they may ask for employee medical information or require medical exams for the program.
Many such wellness programs gather a lot of medical information through biometric screenings. These can involve routine blood work, weigh-ins, BMI measurements, blood pressure readings, and so on.
Voluntary
To be voluntary, employees must not be coerced to participate in a wellness program. The Equal Employment Opportunity Commission (EEOC)’s regulations on wellness programs indicate that, to be voluntary, wellness programs may not:
- Require any employee to participate;
- Deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan; and
- Take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
Some wellness plans include incentives for employees who participate and have biometric screenings. If the incentives are too large, employees who choose not to participate might feel the incentive is more of a punishment for not participating.
Incentive limits
While the ADA does not stipulate incentive limits, HIPAA does. The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor must not exceed 30 percent (or 50 percent for programs designed to prevent or reduce tobacco use) of the cost of employee-only coverage under the plan.
If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 30 percent (or 50 percent) of the cost of the coverage in which an employee and any dependents are enrolled.
Courts have denied employer requests to have incentivized wellness cases under the ADA dismissed, stating that juries must decide whether a program is truly voluntary — whether the incentives are so high that they become more like sticks than carrots.
Key to remember: Employers must tread carefully under both HIPAA and the ADA when it comes to wellness program incentives, as ADA case law can still help define “voluntary.”