Although tethered to their respective incentives, the final regulations sweep broadly. They apply regardless of whether the wellness program is part of an employer’s group health plan and no matter how the wellness program is classified under HIPAA’s nondiscrimination requirements.

The final regulations include many elements contained in the proposed regulations that the EEOC issued last year, but the final rules differ in some important respects. Most significantly, the ADA and GINA rules establish separate, but identical limits on the incentives that may be offered. An employee could receive incentives to provide information about his or her own medical conditions (under the ADA) and incentives for his or her spouse’s participation in a health-risk assessment (under GINA), and each set of incentives would, on its own, need to be less than 30 percent of the total cost of self-funded coverage under the applicable plan. The regulations include specific rules for determining the plan to be considered in applying the limit. For example, if the incentive is linked to participation in a particular group health plan, the limit would be based on the employer’s and employee’s combined cost for self-only coverage under that plan. The limits apply whether the incentives are framed as a reward or a penalty.

The rules impose other requirements, including:

·                 The requirements to participate in the wellness program cannot be overly burdensome.

·                 The information gathered must be applied toward an appropriate purpose, such as alerting employees to health risks or using aggregate data to design a program aimed at a condition prevalent among participants.

·                 Under the ADA rules, employers may not require participation in a covered wellness program as a condition of employment or as a prerequisite for participating in a group health plan.

·                 Employers must comply with specific notice requirements on the use and disclosure of data under the ADA rules and authorization requirements, including a requirement to obtain the spouse’s authorization, under the GINA rules.

·                 Certain confidentiality restrictions apply. For example, under the ADA rule, an employer may not receive more than aggregate data other than for purposes of administering a health plan.

·                 Under the GINA rules, wellness programs may not offer inducements for medical information about an employee’s children.

·                 Employers must still meet other applicable nondiscrimination requirements, including those under HIPAA and the ADA’s requirements for reasonable accommodation.

Employers will need to take necessary measures to comply with the new rules on incentive limits and with the new ADA notice requirements (a model notice is expected to be issued soon) by the first day of the first plan year beginning on or after January 1, 2017. The EEOC regards other requirements in the regulations as already in effect.

Attorneys in Ballard Spahr’s Employee Benefits and Executive Compensation Group regularly provide counsel and representation on matters related to employer-sponsored wellness programs. As federal health care reform effort has gained steam, we established the Health Care Reform Initiative to monitor and analyze developments in health care reform legislation, including those related to wellness programs. Through tracking legislative changes and court decisions, our attorneys are assisting health care entities and employers in understanding the relevant impact of these changes and decisions, and how to plan for the future. For more information, please visit the Health Care Reform Dashboard, our online resource center for news and analysis on these and more recent developments.