Category Archives: Affordable Care Act

California Scheduled to Expand Small Group Definition Despite PACE Act

On October 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act which repeals provisions of the Affordable Care Act, and the Public Health Service Act, that effective January 1, 2016 would otherwise mandate expansion of the definition of “small employer” subject to insurance market reforms, from employers with 1 to 50 employees, to those with up to 100 employees. (This is actually a “look-back” test based on employee headcounts over the prior calendar year).  As discussed in this prior post, the market reform provisions, including modified community rating to determine premiums, and prohibitions on dollar limits on essential health benefits, are expected to significantly increase the cost of coverage for employers with 51 to 100 employees who will be joining the small group market for the first time.

Although the PACE Act repeals the federally-mandated expansion of the “small employer” definition, it leaves states the discretion to expand the definition on their own schedule.  As previously reported, California already enacted legislation this year, S.B. 125, that expands the definition of small employer to employer with 1 to 100 employees, effective for plan or policy years beginning on or after January 1, 2016.  Therefore the California small group market expansion will occur in 2016 unless California legislators take quick action by the end of the year to repeal the expansion or extend its effective date.  Presumably any changes to S.B. 125, now codified in the California Insurance and Health and Safety Codes, would retain other provisions conforming to the ACA, including use of the full-time and full-time equivalent counting method to determine small employer status, and matching open enrollment under the California state exchange, Covered California, to the November 1 – January 31 open enrollment under the federally facilitated changes (  Of course, it is possible that California will not make any changes to S.B. 125.

We will continue to monitor developments on this topic.

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Filed under Affordable Care Act, Benefit Plan Design, California Insurance Laws, California SB 1034, California SB 125, Covered California, Federally Facilitated Exchange, Health Care Reform, Health Insurance Marketplace, PACE Act of 2015, PPACA, Small Group Coverage, Small Group Expansion, State Exchange

IRS Proposes Revisions to ACA Reporting for Health Reimbursement Arrangements

As addressed in our prior post, IRS Notice 2015-68, issued on September 17, 2015, describes and requests comments on a number of ACA reporting issues, including several that that the IRS and Treasury Department plan to address in amended or new proposed regulations. Among the points addressed is avoiding duplicate reporting for multiple sources of MEC provided to the same individual (“supplemental coverage”). The Notice describes the current rule for reporting supplemental coverage as “confusing” and outlines a more streamlined alternative. Examples in the Notice describe how it will apply to Health Reimbursement Arrangements (“HRAs”) that are offered together with group health coverage.  Note:  MEC reporting generally is not required for HRAs, but per recent informal comments by the IRS on a payroll industry conference call, applicable large employers (ALEs) may have to report on HRA coverage that constitutes MEC via Part III of IRS Form 1095-C, under some circumstances.

The proposed new anti-duplication rules, which will apply month-by-month and individual-by-individual, will provide that if an individual is covered by multiple MEC plans or programs provided by the same provider, reporting is required for only one of them. Under this proposed rule, if an individual is enrolled in a self-insured group health plan for a given month and also is takes part in an HRA sponsored by the same employer, the employer, again via Section III of Form 1095-C, is required to report only one type of coverage for that individual (which most likely would be the self-insured group health plan) for that month. If an employee is covered under both arrangements for some months of the year but is covered only under the HRA for other months (for instance, because he or she retires or otherwise drops coverage under the self-insured group health plan), the employer must report coverage under the HRA for those months when it was the only MEC provided.

Under the second proposed anti-duplication rule, reporting generally is not required for MEC for which an individual is eligible only if the individual is covered by other MEC for which MEC reporting is required, so long as the two types of coverage are sponsored by the same employer. This describes the typical “integrated” HRA setting, in which an employer offers an HRA only to employees and dependents who enroll in the employer’s group health plan.  In this setting, a self-insured employer can take advantage of the first anti-duplication rule, and need not report the HRA as MEC for months in which an employee is enrolled in both plans.  However, an employer that is an ALE and sponsors an insured plan may have a reporting duty.  An insured employer that is an ALE need not provide MEC reporting in relation to the HRA for those months in which the employees and dependents are enrolled in the insured plan. However, if an employee is enrolled in an employer’s HRA and in a spouse’s employer’s group health plan, the employee’s employer – if it is an ALE,  must provide MEC reporting for the HRA via Form 1095-C, Section III (and the spouse’s employer separately must provide MEC reporting for its group health plan), by completing Forms 1095-B and 1094-B.  Notably, this duty to report MEC coverage provided to non-employees under an integrated HRA applies even to an employer that is not an “applicable large employer” and need not report offers of coverage on Forms 1095-C and 1094-C.

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Filed under Affordable Care Act, Health Care Reform, Health Reimbursement Arrangements, Minimum Essential Coverage Reporting, Plan Reporting and Disclosure Duties, PPACA, Self-Insured Group Health Plans

ACA Reporting Update: New Procedures for Requesting Family Member SSNs

In Notice 2015-68, issued September 17, 2015, the IRS has modified the steps that must be followed by insurance carriers and self-insured employers to demonstrate a “reasonable effort” to obtain Social Security Numbers or other Tax Identification Numbers (collectively, TIN) for family members enrolled in Minimum Essential Coverage (MEC), and has requested public comment on further adjustments to the requirements. Pending future guidance, following the new procedures will entitle the reporting party to “reasonable cause” relief from penalties for late or incomplete tax returns and employee statements.

Internal Revenue Code § 6055 requires that, among other information, TINs for individuals who are enrolled in MEC be reported by MEC providers. Insurance carriers (issuers) report to insureds via IRS Form 1095-B and self-insured employers report to full-time employees on Section III of IRS Form 1095-C. (Forms 1095-B and 1095-C are transmitted to the IRS under Forms 1094-B and 1094-C, respectively. The IRS issued final 2015 versions of these forms, and instructions for same, also on September 17, 2015.) If the reporting party follows the “reasonable effort” steps to obtain a family member SSN/TIN without success, it may report a date of birth for that individual on the applicable form without penalty.

The new steps required to be followed in order to demonstrate that a reasonable effort has been made to obtain an enrolled family member’s SSN/TIN are as follows:

  1. The initial request is made at the time the individual first enrolls or, if the person is already enrolled on September 17, 2015, the next open enrollment period;
  2. The second request is made at “a reasonable time thereafter” and
  3. The third request is made by December 31 of the year following the initial request.

This sequence replaces the sequence described in the preamble to final regulations under Code § 6055: initial request made when an account is opened or a relationship established, first annual request made by December 31 of the same year (or, if the initial request was made in December, by January 31 of the following year), and second annual request made by December 31 of the following year. The Notice states that that this sequence, which was lifted directly from regulations under Code § 6724, the “reasonable cause” relief statute, prompted concerns among reporting parties that it was not practical in the context of MEC reporting.

Until further guidance, it remains the case that reporting a date of birth in one year does not eliminate the need to make the necessary follow-up requests as described in the Notice.

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Filed under Affordable Care Act, Applicable Large Employer Reporting, Employer Shared Responsibility, Minimum Essential Coverage Reporting, Plan Reporting and Disclosure Duties, Self-Insured Group Health Plans

SCOTUS Rulings Highlight ACA Paradox

The two landmark rulings by the Supreme Court last week – one upholding the ability of the federal health exchange to award premium tax credits, and one upholding the right of same-sex couples to be married in all 50 states – would not appear to be interrelated.  However the back-to-back rulings highlight an unusual paradox in the ACA regarding access to premium tax credits.  Specifically, by marrying and forming “households” for income tax purposes, individuals may lose eligibility for premium tax credits that they qualified for based only on their individual income.  This has always been the case for married couples – both opposite-sex and same-sex — but it may come as news to same-sex couples now seeking to marry in states that prohibited such unions prior to the Supreme Court ruling.

To understand this ACA paradox – that married status may reduce or eliminate premium tax credit eligibility – some background is helpful.

Since January 1, 2014, state health exchanges and the federal exchange have made advance payments of premium tax credits to carriers on behalf of otherwise eligible individuals with household income between 100% and 400% of the federal poverty level (FPL).  For a single individual this translates to annual household income in 2015 between $11,770 – $47,080.  (For individuals in states that expanded Medicaid under the ACA, premium tax credit eligibility starts at 133% (effectively 138%) of FPL, which translates to $16,243.)

For these purposes, “household income” is the modified adjusted gross income of the taxpayer and his or her spouse, and spouses must file a joint return in order to qualify for premium tax credits except in cases of domestic abuse or spousal abandonment.  A taxpayer’s household income also includes amounts earned by claimed dependents who were required to file a personal income tax return (i.e., had earned income in 2015 exceeding $6,300 or passive income exceeding $1,000).   Generally speaking, same-sex adult partners will not qualify as “qualifying relative” tax dependents, in the absence of total and permanent disability.

Therefore, adult couples sharing a home in the absence of marriage or a dependent relationship will be their own individual households for tax purposes and for purposes of qualifying for advance payment of premium tax credits.  Conversely, adult couples who marry must file a joint tax return save for rare circumstances, and their individual incomes will be combined for purposes of premium tax credit eligibility.  By way of example, two cohabiting adults each earning 300% of FPL in 2015 ($35,310) will separately qualify for advance payment of premium tax credits in 2015, presuming their actual income matches what they estimated during enrollment.  However once the couple marries, their combined household income of $70,620 will exceed 400% of FPL for a household of two ($63,720), and they will lose eligibility for premium tax credits.

The rules for figuring tax credit eligibility for a year in which a couple marries or separates are quite complex.  The instructions to IRS Form 8962, Premium Tax Credit return, provide some guidance but the advice of a CPA or other tax professional may be required.

Before the Supreme Court’s ruling last week, the Department of Health and Human Services instructed the exchanges to follow IRS guidance recognizing persons in lawful same-sex marriages as “spouses” for purposes of federal tax law, in accordance with the Supreme Court’s 2013 ruling in United States v. Windsor.  That ruling recognized same-sex marriages under federal law provided that they were lawfully conducted in a state or other country, but fell short of declaring same-sex marriage as a Constitutional right that must be made available in all U.S. states.   It is likely that HHS will update guidance to the exchanges to reflect the recent, more expansive ruling on this issue.

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Filed under 401(k) Plans, Affordable Care Act, Employer Shared Responsibility, Federally Facilitated Exchange, Fringe Benefits, Health Care Reform, Health Insurance Marketplace, Premium Tax Credits, Same-Sex Marriage

California Adopts FT/FTE Counting Method to Determine Small Group Market Eligibility

Update:  Governor Jerry Brown signed SB 125, discussed below, on June 17, 2015.

In 2016, when California’s small group insurance market expands to include employers of up to 100 employees, employers in the state will use the same method of counting full time and full-time equivalent employees towards that threshold, as is required under the ACA’s employer shared responsibility rules.  This will be the effect of Senate Bill 125, which has been enrolled and sent to Governor Brown for signature.  It is expected that he will sign the bill into law, and the bill is effective upon enactment.

Current California Insurance and Health and Safety Code provisions define a “small employer” as an employer that, on at least 50 percent of its working days during the preceding calendar quarter or preceding calendar year, employed at least one, but no more than 50, ‘eligible employees,’ the majority of whom were employed within California.”   An “eligible employee” is in turn defined as “any permanent employee who is actively engaged on a full-time basis  . . . with a normal workweek of an average of 30 hours per week [or at least 20, at the employer’s option] over the course of a month” at the employer’s regular place of business, and who has met any applicable waiting period requirements.”   When it first enacted ACA-compliant measures in the 2011-2012 legislative session (AB 1083), California opted to postpone expansion of this definition — from employers of up to 50, to up to 100 employees — until January 1, 2016, which is the latest expansion date that the ACA allows.

Notably, the current manner of counting employees towards the 100 employee threshold does not take into account full-time equivalent (FTE) employees, which are counted towards the definition of an Applicable Large Employer (ALE) subject to ACA employer shared responsibility (or “pay or play”) duties, as set forth in Internal Revenue Code § 4980H, and final regulations thereunder.  FTEs are determined by totaling hours of service worked in a month by employees (including seasonal workers) who average under 30 hours of service per week (but not exceeding 120 hours/month for any single employee), and dividing the total by 120, such that 10 employees averaging 15 hours per week would result in 5 FTEs.  ACA health exchange regulations require that the ACA definition apply for purposes of policies that are sold on the small group exchange (SHOP) but not with regard to non-exchange policies.  SB 125 makes the ACA counting method applicable to all small group market policies sold in the state, whether or not offered on SHOP:

“For plan years commencing on or after January 1, 2016, the definition of small employer, for purposes of determining employer eligibility in the small employer market, shall be determined using the method for counting full-time employees and full-time equivalent employees set forth in Section 4980H(c)(2) of the Internal Revenue Code.”

California Insurance Code § 1357.600(q)(3); California Health and Safety Code § 1357.500(k)(3), both as amended by SB 125.  Both measures apply only to nongrandfathered health plans.

As a result, and with one important exception noted below, California employers will only need to do one set of calculations to be able to determine their status as Applicable Large Employers subject to ACA pay or play rules, and their status with regard to California’s small or large group markets.

The exception is with regard to counting employees of related entities.  Both California Code provisions amended by SB 125 require employers to count employees employed by “affiliated companies” that are eligible to file a combined tax return for purposes of state taxation.  However, the test for joint filing under the California Revenue and Taxation Code is not the same as “controlled group” status under federal law, which is expressly incorporated into the employee counting rules in Code Section 4980H(c)(2).  It is possible that this was an unintended drafting discrepancy that future guidance will resolve, but in the meantime, California employers with related entities should consult their state and federal law tax advisors to make sure they are counting employees properly for California small group eligibility and ACA shared responsibility purposes.

This exception aside, SB 125 brings welcome simplification at a time when employers with between 51 and 100 employees are calculating the likely costs and complications of losing access to large group coverage, and entering a market subject to rating restrictions and mandated coverage of essential health benefits.  Although legislative measures are afoot to allow states to further postpone, past 2016, the expansion of the small employer definition, California is unlikely to adopt any such change, should it become available.

SB 125, which was sponsored by California Senator Ed Hernandez (D-West Covina) also changes the annual open enrollment period for California’ state health exchange, Covered California™ , from October 15-December 7 of the year preceding the coverage year, to November 1 of the year preceding the coverage year, through January 31 of the new coverage year.  This is also consistent with the ACA, specifically with the Final HHS Notice of Benefit and Payment Parameters for 2016.  The new open enrollment period will first apply on November 1, 2015 through January 31, 2016, for the 2016 coverage year.

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Filed under Affordable Care Act, California AB 1083, California Insurance Laws, Covered California, Employer Shared Responsibility

Agency FAQs Address a Variety of Preventive Care Questions

On May 11, 2015, the Departments of Labor, Treasury, and Health and Human Services issued the 26th in a series of Frequently Asked Questions on implementation of the Affordable Care Act.  The FAQs provide needed clarification on several aspects of no-cost preventive health services required to be provided under the Act.  Key points are summarized below.

Expanded BRCA Genetic Testing and Counseling

  • The FAQ extends BRCA genetic testing and counseling without cost sharing to women who do not have a family history of the specified cancers, but who themselves have had breast, ovarian, or other cancer that was not diagnosed as BRCA-related. Medical studies cited in the FAQ found that these women show an increased risk of gene mutation, even in the absence of a family history of cancer, such that genetic testing could identify and prevent later disease. No-cost genetic testing and counseling for these women, even when asymptomatic and cancer free, is thus a logical extension of current preventive care guidelines triggered by family disease history.

Dependent Access to Well-woman Preventive Care

  • Dependent children may receive recommended preventive care services without cost sharing under non-grandfathered group health plans and individual policies; the ACA defines “dependent” as children up to age 26. Accordingly, female dependents may receive well-woman preventive services through age 25, including preconception care and prenatal care, where those services are determined to be age- and developmentally appropriate. Dependent coverage need not be extended to the child of a child receiving dependent coverage.

Access to Sex-Specific Preventive Care

  • Sex-specific preventive care and screening must be provided at no cost whenever an individual’s attending provider determines that it is medically appropriate, irrespective of the individual’s sex assigned at birth, gender identity, or recorded gender. In the example given, a transgender man with residual breast tissue would qualify for a mammogram with no cost sharing if other criteria for the preventive service, and for coverage, are met.
    • Note: “attending provider” includes licensed individual healthcare providers to the patient in question, and does not include plans, issuers, hospitals or HMOs.

Clarification re: No-Cost Coverage of Contraceptive Methods

  • Group health plans and issuers must cover, without cost sharing, at least one form of each of the 18 methods of birth control methods for women that are identified in, among other sources, the current version of the FDA Birth Control Guide. The no-cost coverage of the contraception method must also include related clinical services, such as patient education and counseling.
  • This rule takes effect for plan or policy years beginning on or after July 10, 2015; the delayed effective date allows time for changes to be made by plans and issuers who reasonably interpreted prior guidance as not requiring that at least one form of contraception in each of the 18 methods be offered without cost sharing.  Based on this principle, it is not permitted to cover oral contraceptives with no cost sharing, while imposing cost sharing on other FDA-identified hormonal contraceptive methods such as emergency contraception or the contraceptive patch.
  • Within each of the 18 methods of contraception, plans and issuers may use reasonable medical management techniques and impose cost sharing to encourage use of specific services or FDA-approved items within that method. For instance, a plan could provide generic birth control pills at no cost and impose cost sharing for brand name pills. However, the plan would need to make exceptions, and waive cost sharing for name brand drugs, for women for whom it was medically inadvisable to take the generic version.
  • When multiple medically appropriate services and FDA-approved items exist within a given contraceptive method, plans and issuers may use reasonable medical management techniques to encourage use of some services and methods over others. However, if a woman’s attending provider recommends a specific service or item based on medical necessity, the plan or issuer must cover the service or item without cost sharing.
    • “Medical necessity” in this context may take into account the severity of side effects, differences in permanence and reversibility of contraceptives, and the ability to adhere to the appropriate use of the item or service, as determined by the attending provider.
  • In either instance (exception to medical management technique, or recommendation of specific service or item) the process for obtaining coverage must be efficient, transparent, easily accessible and not unduly burdensome to the patient, her attending provider, or other authorized representative, and the plan or issuer must defer to the determination of the attending provider regarding medical necessity. In addition, the plan or issuer must determine the claim within the time periods, and in the manner, applicable to a pre-service, post-service, or urgent care claim, as is appropriate under the circumstances. (Requests that involve urgent care must be resolved as soon as possible, but no later than 72 hours after receipt.)
  • Note that group health plans established by or maintained by religious employers (generally limited to “steeple” churches or other houses of worship) are exempt from the requirement to cover contraceptive services, and accommodations are available to group health plans maintained by certain nonprofit organizations founded on religious principle.  Guidance related to the religious exemption is summarized here.

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Filed under Affordable Care Act, GINA/Genetic Privacy, Health Care Reform, PPACA, Preventive Care

Proposed EEOC Rules Further Complicate Wellness Program Design

On April 20, 2015, the Equal Employment Opportunity Commission (EEOC) published proposed regulations and interpretive guidance (collectively, “rules”) under Title I of the Americans with Disabilities Act (ADA) applicable to incentive-based wellness programs commonly offered in connection with group health plans.  The new rules add to existing wellness regulations under HIPAA and the ACA, which are published and enforced by the Departments of Treasury, Labor, and Health and Human Services (the “Departments”).

The new guidance primarily impacts wellness programs that condition large financial incentives (or penalties) on employees undergoing biometric testing and/or completing health risk assessments (HRAs).  However it has broader implications – and complications – for all wellness program designs.  Below we explain why certain wellness program designs fall under the ADA, how the EEOC’s proposed rules, if finalized in their current form, would limit design options for these programs, and what employers might consider doing in the meantime.

Wellness Programs Subject to the ADA

As mentioned, the EEOC rules primarily impact wellness programs that provide a high financial reward for merely undergoing biometric testing and/or completing an HRA, or that impose a penalty on employees who choose not to participate in such testing.

This specific plan design is permitted under existing HIPAA/ACA wellness regulations, which aim to prevent discrimination on one or more “health factors,” including a disability, illness, claims experience or medical history.  As we have discussed in an earlier post, those regulations permit employers to tie any size financial incentive or penalty to a wellness program that requires mere participation (“participation-only”), and restrict the incentive (and impose other design criteria) only when the incentive is conditioned on physical activity or attainment of a specific health outcome (“health-contingent”).

The Departments consistently have maintained, however, that satisfaction of HIPAA/ACA requirements does not equal satisfaction of other laws governing wellness programs, including the ADA.  They most recently reiterated this position in ACA FAQ XXV, published on April 16, 2015.  And the EEOC in past guidance has identified biometric testing as a workplace medical examination, and HRAs as containing “disability-related inquiries,” such that participation must be “voluntary” on the part of the employee.   EEOC Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the ADA, Q&A 22. (July 27, 2000).   That guidance clarified that a wellness program is “voluntary” as long as an employer neither requires participation nor penalizes employees who do not participate.  Even since, the EEOC requirement of voluntary participation has been on a collision course with the unlimited financial incentives that HIPAA and the ACA permit under “participation-only” wellness plans.

What was not clear, until publication of the new rules, was the point at which a financial wellness incentive crossed the border from voluntary to coercive, in the eyes of the EEOC.   Employer uncertainty on this point reached a crescendo in the latter part of 2014, when the EEOC brought three separate enforcement actions against employers whose “participation only” wellness programs included biometric testing and HRAs, but met applicable HIPAA/ACA design guidelines for same.  In the third and most prominent action, against Honeywell, the wellness program imposed a potential annual surcharge of up to $4,000 on employees who refused, along with their spouse, to undergo biometric testing including a blood draw, performed by a third party vendor.  The federal court rejected the EEOC’s attempt to stop Honeywell’s use of the program, but the case had a “chilling effect” on employers whose wellness programs followed similar designs.

Proposed Design Restrictions

Under the proposed EEOC rules, an incentive or reward under a wellness program that includes biometric testing and/or an HRA crosses the line from voluntary to coercive when it exceeds a dollar amount equal to 30% of the total cost of employee-only health coverage (employer and employee contributions, combined).  An additional incentive or penalty of up to 20% may be imposed in exchange for the employee disclosing whether or not they use tobacco, but not in exchange for blood testing for nicotine or cotinine.  Most significant, this cap on incentives applies to biometric testing and HRAs (or to other forms of medical examination or disability-related inquiries under a wellness program) even when the program is “participation-only” under HIPAA/ACA rules.  Note that only employers with 15 or more employees are subject to Title I of the ADA; smaller employers are outside the EEOC’s jurisdiction.

By contrast, the HIPAA/ACA rules apply these limits only to health-contingent wellness programs, and also permit the maximum percentage limits to apply to the cost of dependent coverage when the wellness program allows participation by dependents.  The EEOC rules do not address dependent participation, most probably because their jurisdiction is limited to the employer-employee relationship.  Nor do they address whether participation by spouses in biometric testing/HRAs triggers concerns under the Genetic Information Nondisclosure Act, or “GINA.” The EEOC did take this position in the Honeywell case, however, and in the new guidance reserves the topic for future comment.

In addition to the cap on incentives, the EEOC rules would also impose other criteria for “voluntariness” on wellness programs that include biometric testing/HRAs, including that:

  • the employer may not require participation in the wellness program;
  • the employer may not deny access to health coverage (other than through imposition of the permitted reward/penalty percentage) to those who do not participate; and
  • the employer may not take adverse employment action or otherwise retaliate against employees who do not participate, or who participate but do not attain a desired health outcome.

Additionally, for all wellness programs that are used in conjunction with a group health plan, whether or not they include biometric testing/HRAs, employers must provide a written notice explaining what medical information will be obtained under the wellness program, how it will be used, and the restrictions on disclosure that apply, including HIPAA privacy and security rules.  Note that this is in addition to the notification of reasonable alternative methods of attaining a wellness reward that the HIPAA/ACA rules require be included in all health-contingent wellness program materials.

The EEOC rules also impose confidentiality requirements on all wellness programs, not just that include biometric testing/HRAs, and further require that wellness programs be “reasonably designed to promote health or prevent disease.”  The EEOC confidentiality and reasonable design rules are quite similar to existing requirements under HIPAA/ACA regulations, with the following modifications:

  • The EEOC confidentiality rules require that medical information be disclosed to employers only in aggregate form, except as is necessary to administer the health plan.
  • The EEOC reasonable design rules would apply to participation-only wellness programs; under HIPAA/ACA regulations they only apply to health-contingent programs.
  • The EEOC reasonable design rules would require that a wellness program that collects medical information (such as through biometric testing) provide follow-up information or advice with regard to health issues.
  • The EEOC reasonable design rules would prohibit wellness programs that require an overly burdensome investment of time in order to attain an incentive, involve unreasonably intrusive procedures, or act primarily to shift health costs onto employees.

Finally, the EEOC rules require that all wellness programs satisfy reasonable accommodation requirements under the ADA.  Under existing HIPAA/ACA regulations, accommodation (in the form of an offer of alternative ways to attain a reward) is only expressly required for health-contingent wellness programs.  The example given is provision of a sign language interpreter to allow a hearing-impaired employee to attain a reward by taking part in nutrition classes.

What to Do Now  

It is likely that the EEOC will receive a large number of public comments on the proposed regulations and guidance.  They have asked for comments on a number of points in addition to the proposed guidance, including whether wellness incentive limits should link to the ACA concept of “affordable” coverage.

Public comments are due on June 19, 2015 and it may take some time for the EEOC to incorporate them into final regulations and guidance.  Although compliance with the proposed rules is optional in the meantime, the standards they outline likely will function as a “safe harbor” from challenge on ADA grounds, such that risk-averse employers may want to take steps to comply with them proactively.    In the interim, employers can also expect business lobbies to challenge the dual standard the EEOC rules would impose on several aspects of participation-only wellness programs. (A House bill that would insulate ACA/HIPAA compliant wellness incentives from attack under GINA or the ADA was proposed before the EEOC rules were published.)  All employers maintaining wellness programs should consider distributing the notice re: wellness program data collection, use and privacy, and should work with their wellness vendors and benefit advisors to craft the appropriate language.   Pending further guidance on whether participation by family members triggers GINA concerns, it seems premature to eliminate, or modify wellness incentives for participation by spouses and dependents.

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Filed under Affordable Care Act, Benefit Plan Design, HIPAA and HITECH, PPACA, Wellness Programs