This article was originally published in the August 2010 issue of The HR Specialist. It is reprinted here with permission.
In the effort to drive down health care costs, decrease employee absenteeism, and promote a healthy lifestyle among their employees, more and more companies are implementing wellness programs. Often, those programs provide incentives for participation in the program as well as additional rewards to those who achieve healthy goals, such as weight loss and smoking cessation. According to a recent Wall Street Journal article, approximately 70 percent of employers offer wellness programs and 64 percent of those employers offer employees incentives such as cash, gift cards, or premium discounts.
Wellness programs that offer premium discounts or surcharges have long been required to comply with certain provisions of HIPAA which would otherwise prohibit discriminating on the basis of an employee’s medical condition in determining premium costs. HIPAA provides a safe harbor for wellness programs that meet certain criteria, including a cap of 20 percent on premium discounts or surcharges. More recently, two other laws have addressed company wellness programs, in somewhat inconsistent ways: the Patient Protection and Affordable Care Act (PPACA), enacted on March 23, 2010, and the Genetic Information Nondiscrimination Act (GINA), passed in 2008.
PPACA encourages employers to develop wellness programs and employees to participate in those programs. Among other things, the PPACA codifies the HIPAA safe harbor for wellness programs and increases to 30 percent (from 20 percent) the maximum incentives that employers can offer to employees for participation in a wellness program or for meeting certain health targets. Moreover, PPACA creates a $200 million, five-year program to provide grants to certain small employers for implementing comprehensive workplace wellness programs.1
In contrast to PPACA’s support for wellness programs, GINA established certain roadblocks to the ability of a health plan or an employer to administer wellness programs, in the interest of protecting genetic information.
Title I of GINA
Title I of GINA, which governs health plans and insurers, prohibits plans and insurers from collecting genetic information for the purpose of "providing discounts, rebates, payments in kind, or other premium differential mechanisms in return for activities such as completing a health risk assessment or participating in a wellness program" (emphasis added).2 This provision arguably undermines the ability of a wellness program to provide individually tailored health advice by preventing access to an employee’s genetic and family medical history.
As a result, employers who adopt wellness programs administered by a health plan or insurer are essentially stuck between a rock and a hard place. The Interim Final Rules provide suggestions for addressing this dilemma: (1) Eliminate incentives: A plan or issuer can continue to collect genetic information through health risk assessments (HRAs) as long as there are no incentives provided for completion of the HRA,3 or (2) Eliminate collection of genetic information: A plan or issuer can continue to provide incentives for the completion of an HRA so long as the HRA does not collect any genetic information. The Interim Final Rules suggest that a plan could administer two distinct HRAs, one that does not request genetic information and one that does. A reward could be provided for completing the HRA that does not solicit genetic information while the instructions for the second HRA make clear that completion of that HRA is wholly voluntary and will not affect the reward given for completion of the first HRA.4
Title II of GINA
Title II of GINA contains the employment-related provisions. If a wellness program is administered by an employer (rather than by a health plan or insurer), GINA provides an exception to the prohibition against collecting genetic information, so long as certain requirements are met. Under the proposed regulations for Title II of GINA, an employer may collect genetic information, such as family medical history, as part of a wellness program if the following requirements are met: (1) the employee provides prior, knowing, voluntary and written authorization; (2) only the employee and licensed health care professional or board certified counselor involved in providing such services receive individually identifiable information concerning the results of such services; and (3) any individually identifiable genetic information provided to the licensed health care professional or board certified counselor in connection with the wellness program cannot be disclosed to the employer except in aggregate terms that do not disclose the identity of the specific employees.5
Determining whether these factors are met is likely to be focused on whether the wellness program can truly be considered "voluntary" when it offers financial incentives for providing genetic information. Although the proposed regulations state that a wellness program is voluntary as long as an employer neither requires participation nor penalizes employees who do not participate,6 the EEOC invited comments in its Notice of Proposed Rulemaking on what voluntary means in practice. To date, the EEOC has not promulgated its final regulations.
Until final regulations are issued, employers that offer incentives to participate in wellness programs that include the collection of genetic information risk violating GINA. On the other hand, if employers take the cautious approach and avoid asking employees to submit genetic information, the wellness program may be less effective. Unfortunately, until the EEOC provides additional guidance in the form of final regulations, employers must tread carefully.
Given the current state of the law and the overlapping statutory schemes, employers who have or are planning to implement wellness programs should consult with counsel to make sure that their programs are compliant with all applicable laws.
1 The wellness program provisions become effective on January 1, 2014.
2 Interim Final Rules Prohibiting Discrimination Based on Genetic Information in Health Insurance Coverage and Group Health Plans, 74 Fed. Reg. 193, 51664 (October 7, 2009) (Interim Final Rules) available at
3 Id. at 51669.
4 Group health plans and health insurance issuers also are prohibited from collecting genetic information for enrollment purposes. Accordingly, if the above changes are made to the HRAs, but the HRAs are being administered during enrollment, then the HRAs will still be in violation of GINA.
5 The Genetic Information Nondiscrimination Act, Pub L. No. 110-233 (codified as 42 U.S.C. §§2000ff et. seq.) (2008) available at www.gpo.gov/fdsys/pkg/PLAW-110publ233/html/PLAW-110publ233.htm.
Susan K. Lessack and Kali T. Wellington
The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.