[Federal Register Volume 80, Number 75 (Monday, April 20, 2015)]
[Proposed Rules]
[Pages 21659-21670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08827]


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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

29 CFR Part 1630

RIN 3046-AB01


Amendments to Regulations Under the Americans With Disabilities 
Act

AGENCY: Equal Employment Opportunity Commission.

ACTION: Proposed rule.

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SUMMARY: The Equal Employment Opportunity Commission (``EEOC'' or 
``Commission'') is issuing a proposed rule that would amend the 
regulations and interpretive guidance implementing Title I of the 
Americans with Disabilities Act (ADA) as they relate to employer 
wellness programs. The proposed rule amends the ADA regulations to 
provide guidance on the extent to which employers may use incentives to 
encourage employees to participate in wellness programs that include 
disability-related inquiries and/or medical examinations.

DATES: Comments regarding this proposal must be received by the 
Commission on or before June 19, 2015. Please see the sections below 
entitled ADDRESSES and SUPPLEMENTARY INFORMATION for additional 
information on submitting comments.

ADDRESSES: You may submit comments, identified by RIN number 3046-AB01, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 663-4114. (There is no toll free FAX number). 
Only comments of six or fewer pages will be accepted via FAX 
transmittal, in order to assure access to the equipment. Receipt of FAX 
transmittals will not be acknowledged, except that the sender may 
request confirmation of receipt by calling the Executive Secretariat 
staff at (202) 663-4070 (voice) or (202) 663-4074 (TTY). (These are not 
toll free numbers).
     Mail: Bernadette B. Wilson, Acting Executive Officer, 
Executive Secretariat, Equal Employment Opportunity Commission, U.S. 
Equal Employment Opportunity Commission, 131 M Street NE., Washington, 
DC 20507.
     Hand Delivery/Courier: Bernadette Wilson, Acting Executive 
Officer, Executive Secretariat, Equal Employment Opportunity 
Commission, U.S. Equal Employment Opportunity Commission, 131 M Street 
NE., Washington, DC 20507.
    Instructions: The Commission invites comments from all interested 
parties. All comment submissions must include the agency name and 
docket number or the Regulatory Information Number (RIN) for this 
rulemaking. Comments need be submitted in only one of the above-listed 
formats. All comments received will be posted without change to http://www.regulations.gov, including any personal information you provide.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. Copies of the 
received comments also will be available for review at the Commission's 
library, 131 M Street NE., Suite 4NW08R, Washington, DC 20507, between 
the hours of 9:30 a.m. and 5:00 p.m., from June 19, 2015 until the 
Commission publishes the rule in final form.

FOR FURTHER INFORMATION CONTACT: Christopher J. Kuczynski, Assistant 
Legal Counsel, (202) 663-4665, or Joyce Walker-Jones, Senior Attorney 
Advisor, at (202) 663-7031, or (202) 663-7026 (TTY), Office of Legal 
Counsel, U.S. Equal Employment Opportunity Commission. (These are not 
toll free numbers.) Requests for this notice in an alternative format 
should be made to the Office of Communications and Legislative Affairs 
at (202) 663-4191 (voice) or (202) 663-4494 (TTY). (These are not toll 
free numbers.)

SUPPLEMENTARY INFORMATION:

Introduction

    The Equal Employment Opportunity Commission (``EEOC'' or 
``Commission'') is issuing a proposed rule that would amend the 
regulations and interpretive guidance implementing Title I of the 
Americans with Disabilities Act (ADA) as they relate to employer 
wellness programs. Congress enacted the ADA in 1990 to prohibit 
discrimination against individuals with disabilities. The EEOC issued 
implementing regulations in 1991 to provide additional guidance on the 
law's requirements and prohibited practices with respect to 
employment.\1\

[[Page 21660]]

This proposed rule provides guidance on the extent to which the ADA 
permits employers to offer incentives to employees to promote 
participation in wellness programs that are employee health 
programs.\2\ It does not apply to similar types of programs that may be 
provided by entities other than those subject to Title I of the ADA, 
such as social service agencies covered under Title II of the ADA, 42 
U.S.C. 12131 et seq., or places of public accommodation subject to 
Title III of the ADA, 42 U.S.C. 12181 et seq., who may provide similar 
programs to individuals who are considered volunteers.\3\
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    \1\ The citations in this proposed rule are to the 2011 
regulations. In 2011, EEOC issued amended regulations to revise the 
definition of disability and other provisions to conform to changes 
to the ADA made by the ADA Amendments Act of 2008, but did not amend 
the provisions concerning disability-related inquiries and medical 
examinations of employees at 29 CFR 1630.14 that affect employee 
health programs. Some of the other revisions, however, resulted in 
renumbering.
    \2\ The ADA provides that, ``[a] covered entity may conduct 
voluntary medical examinations and inquiries, including voluntary 
medical histories, which are part of an employee health program 
available to employees at that work site.'' 42 U.S.C. 
12112(d)(4)(B)(emphasis added). As referenced in this proposed rule, 
wellness programs are ``employee health programs.''
    \3\ This proposed rule also does not address the extent to which 
Title II of the Genetic Information Nondiscrimination Act (GINA) of 
2008, 42 U.S.C. 2000ff, et seq., affects an employer's ability to 
condition incentives on a family member's participation in a 
wellness program. This issue will be addressed in future EEOC 
rulemaking.
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    A wellness program may be part of a group health plan or may be 
offered outside of a group health plan.\4\ The references in the 
proposed rule regarding the requirement to provide a notice and the use 
of incentives, and changes to the corresponding section of the 
interpretive guidance, apply only to wellness programs that are part of 
or provided by a group health plan or by a health insurance issuer 
offering group health insurance in connection with a group health 
plan.\5\ The term ``group health plan'' includes both insured and self-
insured group health plans and is used interchangeably with the term 
``health plan'' throughout the preamble. All of the other proposed 
changes to the regulations apply to all ``health programs,'' which 
include wellness programs whether or not they are offered as part of or 
outside of a group health plan or group health insurance coverage. The 
term ``incentives'' includes both financial and in-kind incentives, 
such as time-off awards, prizes, or other items of value.
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    \4\ The term ``group health plan'' is defined in ERISA section 
733(a). An employer may establish or maintain more than one group 
health plan.
    \5\ This proposed rule asks for comments on whether employers 
offer (or are likely to offer in the future) wellness programs 
outside of a group health plan or group health insurance coverage 
that use incentives to promote participation in such programs or to 
encourage employees to achieve certain health outcomes and whether 
EEOC should issue regulations specifically limiting incentives 
provided as part of such programs.
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Discussion

    As a means of attempting to improve employees' health and reduce 
health care costs, many employers that provide health coverage also 
offer employee health programs and activities to promote healthier 
lifestyles or prevent disease.\6\ Commonly referred to as workplace 
wellness programs, these programs may include, for example: nutrition 
classes, onsite exercise facilities, weight loss and smoking cessation 
programs, and/or coaching to help employees meet health goals. Wellness 
programs also may incorporate health risk assessments and biometric 
screenings that measure an employee's health risk factors, such as body 
weight and cholesterol, blood glucose, and blood pressure levels.\7\ 
Some employers offer incentives to encourage employees simply to 
participate in a wellness program, while others offer incentives based 
on whether employees achieve certain health outcomes.\8\ Incentives can 
be framed as rewards or penalties and often take the form of prizes, 
cash, or a reduction or increase in health care premiums or cost 
sharing. Of the employers who offer incentives to complete wellness 
programs, the majority use incentives totaling less than $500 per 
year.\9\
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    \6\ See Rand Health, Workplace Wellness Programs Study Final 
Report (2013), sponsored by the U.S. Departments of Labor and Health 
and Human Services, available at http://www.rand.org/content/dam/rand/pubs/research_reports/RR200/RR254/RAND_RR254.pdf [hereinafter 
referred to as the RAND Final Report]; see also The Kaiser Family 
Foundation and Health Research & Educational Trust 2014 Employer 
Health Benefits Survey, available at http://kff.org/health-costs/report/2014-employer-health-benefits-survey/ [hereinafter referred 
to as the Kaiser Survey].
    \7\ Id.
    \8\ According to the RAND Final Report, 69 percent of employers 
with at least 50 employees offer financial incentives to encourage 
employee participation, while 10 percent offer incentives tied to 
health outcomes. By contrast, the Kaiser Survey found that 36 
percent of large employers with 200 or more employees and 18 percent 
of smaller employers offer financial incentives to participate in a 
wellness program.
    \9\ According to the Kaiser Survey, 68 percent of all large 
firms that offered an incentive for the completion of a wellness 
program used a maximum incentive below $500.
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    Employee health programs offered by employers must comply with laws 
enforced by the EEOC, including Title I of the Americans with 
Disabilities Act (ADA) which restricts the medical information 
employers may obtain from applicants and employees and makes it illegal 
to discriminate against individuals based on disability.\10\ They also 
must comply with other laws EEOC enforces that prohibit discrimination 
based on race, color, sex (including pregnancy), national origin, 
religion, compensation, age, or genetic information.\11\ Additionally, 
wellness programs that are part of group health plans must comply with 
the requirements of the Health Insurance Portability and Accountability 
Act of 1996 (HIPAA), as amended by the Patient Protection and 
Affordable Care Act (``Affordable Care Act'')\12\--set forth in 
regulations jointly issued by the Department of Labor (DOL), Department 
of the Treasury, and Department of Health and Human Services (HHS)--
that generally prohibit discrimination in group health plans based on 
any health factor.\13\
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    \10\ 42 U.S.C. 12101 et seq.
    \11\ See Title VII of the Civil Rights Act of 1964, 42 U.S.C. 
2000e et seq.; the Equal Pay Act of 1963, 29 U.S.C. 206(d); the Age 
Discrimination in Employment Act (ADEA) of 1967, 29 U.S.C. 621 et 
seq.; and Title II of GINA. However, this proposed rule concerns 
only the application of the ADA's rules limiting disability-related 
inquiries and medical examinations of employees to employer-
sponsored wellness programs. Compliance with the limits on 
incentives in this proposed rule does not necessarily result in 
compliance with other nondiscrimination laws or other parts of the 
ADA. For example, as the interpretive guidance accompanying the 
proposed rule explains, even if an employer's wellness program 
complies with the incentive limits set forth in the ADA regulations, 
the employer violates Title VII or the ADEA if that program 
discriminates on the basis of race, sex, national origin, or age.
    \12\ The Patient Protection and Affordable Care Act, Public Law 
111-148, and the Health Care and Education Reconciliation Act, Pub. 
L. 111-152, are known collectively as the Affordable Care Act. 
Section 1201 of the Affordable Care Act amended and moved the 
nondiscrimination and wellness provisions of the Public Health 
Service (PHS) Act from section 2702 to section 2705, and extended 
the nondiscrimination provisions to the individual market. The 
Affordable Care Act also added section 715(a)(1) to ERISA and 
section 9815(a)(1) to the Code to incorporate the provisions of part 
A of title XXVII of the PHS Act, including PHS Act section 2705, 
into ERISA and the Code and make them applicable to group health 
plans and group health insurance issuers.
    \13\ A wellness program that is part of a group health plan also 
must comply with HIPAA's Privacy, Security, and Breach Notification 
requirements set forth at 45 CFR part 160 and part 164. These 
requirements are discussed later in this preamble.
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    The laws relevant to this proposed rule are discussed below.

HIPAA's Nondiscrimination Provisions

    HIPAA's nondiscrimination provisions, as amended by the Affordable 
Care Act, generally prohibit group health plans and health insurance 
issuers offering group health insurance in connection with a group 
health plan from discriminating against participants and beneficiaries 
in premiums, benefits, or eligibility based on a health factor.\14\

[[Page 21661]]

An exception to the general rule allows premium discounts or rebates or 
modification to otherwise applicable cost sharing (including 
copayments, deductibles, or coinsurance) in return for adherence to 
certain programs of health promotion and disease prevention.\15\
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    \14\ The HIPAA nondiscrimination provisions set forth eight 
health status-related factors, which the December 13, 2006 final 
regulations refer to as ``health factors.'' Under HIPAA and the 2006 
regulations, as well as under the Public Health Service (PHS) Act 
section 2705 (as added by the Affordable Care Act), the eight health 
factors are health status, medical condition (including both 
physical and mental illnesses), claims experience, receipt of health 
care, medical history, genetic information, evidence of insurability 
(including conditions arising out of acts of domestic violence), and 
disability. 71 FR 75014 (Dec. 13, 2006). In the view of the 
Departments of Labor, HHS, and the Treasury, ``[t]hese terms are 
largely overlapping and, in combination, include any factor related 
to an individual's health.'' 66 FR 1379 (January 8, 2001).
    \15\ Prior to the enactment of the Affordable Care Act, HIPAA 
added section 9802 of the Internal Revenue Code, section 702 of the 
Employee Retirement Income Security Act (ERISA), and section 2702 of 
the PHS Act. DOL, Treasury, and HHS issued joint final regulations 
in 2006 regarding wellness programs in connection with a group 
health plan or group health insurance coverage under which any of 
the conditions for obtaining a reward is based on satisfying a 
standard related to a health factor. See 26 CFR 54.9802-1(f); 29 CFR 
2590.702(f); 45 CFR 146.121(f). Paragraph (f)(2) of the 2006 
regulations limited the total reward for such wellness programs to 
20 percent of the total cost of coverage under the plan. The 
Affordable Care Act amended the PHS Act to raise the limitation on 
incentives to 30 percent of the total cost of coverage under the 
plan. See PHS Act section 2705(j)(3)(A). The DOL, IRS, and HHS 
issued final regulations in June 2013 to implement PHS Act section 
2705 and amend the 2006 HIPAA regulations regarding 
nondiscriminatory wellness programs in group health coverage. 78 FR 
33158 (June 3, 2013). Under the 2013 final regulations on 
nondiscriminatory wellness programs, references to ``a plan 
providing a reward include both providing a reward (such as a 
discount or rebate of a premium or contribution, a waiver of all or 
part of a cost-sharing mechanism, an additional benefit, or any 
financial or other incentive) and imposing a penalty (such as a 
surcharge or other financial or nonfinancial disincentive).''
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    HIPAA's nondiscrimination provisions, as amended by the Affordable 
Care Act, and the 2013 final regulations issued by the Departments of 
Labor, Treasury, and HHS, discuss two types of wellness programs: 
Participatory and health-contingent. Participatory wellness programs 
either do not provide a reward or do not include any conditions for 
obtaining a reward that are based on an individual satisfying a 
standard related to a health factor. Examples in the final regulations 
include: A program that reimburses employees for all or part of the 
cost for membership in a fitness center; a program that reimburses 
employees for the costs of participating, or that otherwise provides a 
reward for participating, in a smoking cessation program without regard 
to whether the employee quits smoking; and a program that provides a 
reward to employees who complete a health risk assessment (HRA) 
regarding current health status, without any further action 
(educational or otherwise) required by the employee with regard to the 
health issues identified as part of the assessment. The 2013 final 
regulations state that participatory wellness programs are permissible 
under the HIPAA nondiscrimination requirements provided they are made 
available to all similarly situated individuals.
    Health-contingent wellness programs, which may be either activity-
only or outcome-based, require individuals to satisfy a standard 
related to a health factor to obtain a reward (or require an individual 
to undertake more than a similarly situated individual based on a 
health factor in order to obtain the same reward). Activity-only 
programs require individuals to perform or complete an activity related 
to a health factor in order to obtain a reward, but do not require an 
individual to attain or maintain a specific health outcome. Outcome-
based programs require individuals to attain or maintain a specific 
health outcome (such as not smoking or attaining certain results on 
biometric screenings) in order to obtain a reward.
    There are five requirements for health-contingent wellness programs 
under the Public Health Service (PHS) Act section 2705 and the 2013 
final regulations.\16\ First, all individuals eligible for a health-
contingent wellness program must be given the opportunity to qualify 
for the reward at least once per year. Second, the total reward offered 
to an individual under all health-contingent wellness programs with 
respect to a plan cannot exceed 30 percent of the total cost of 
employee-only coverage under the plan, including both employee and 
employer contributions towards the cost of coverage (or 50 percent to 
the extent that the additional percentage is attributed to tobacco 
prevention or reduction). Third, health-contingent wellness programs 
must be reasonably designed to promote health or prevent disease. 
Fourth, the full reward under a health-contingent wellness program must 
be available to all similarly situated individuals. For this purpose, 
an activity-only program must allow a reasonable alternative standard 
(or waiver of the otherwise applicable standard) for obtaining the 
reward for any individual for whom, for that period, it is unreasonably 
difficult due to a medical condition to satisfy the otherwise 
applicable standard, and for any individual for whom, for that period, 
it is medically inadvisable to attempt to satisfy the otherwise 
applicable standard. An outcome-based program must allow a reasonable 
alternative standard (or waiver of the otherwise applicable standard) 
for obtaining the reward to any individual who does not meet the 
initial standard based on a measurement, test, or screening. Fifth, 
plans and issuers must disclose the availability of a reasonable 
alternative standard to qualify for the reward in all plan materials 
describing the terms of a health-contingent wellness program and in any 
disclosure that an individual did not satisfy an initial outcome-based 
standard.
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    \16\ For the requirements applicable to activity-only programs, 
see 26 CFR 54.9802-1(f)(3), 29 CFR 2590.702(f)(3), and 45 CFR 
146.121(f)(3). For requirements applicable to outcome-based 
programs, see 26 CFR 54.9802-1(f)(4), 29 CFR 2590.702(f)(4), and 45 
CFR 146.121(f)(4).
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    The 2013 final regulations recognize that compliance with HIPAA 
nondiscrimination rules (as amended by the Affordable Care Act), 
including the wellness program requirements, is not determinative of 
compliance with any other provision of any other state or federal law, 
including, but not limited to, the ADA, Title VII of the Civil Rights 
Act of 1964 (Title VII), and the Genetic Information Nondiscrimination 
Act (GINA).\17\
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    \17\ See 78 FR at 33168 (``The Departments recognize that many 
other laws may regulate plans and issuers in their provision of 
benefits to participants and beneficiaries. These laws include, but 
are not limited to, the ADA, Title VII of the Civil Rights Act of 
1964, Code section 105(h) and PHS Act section 2716 (prohibiting 
discrimination in favor of highly compensated individuals), the 
Genetic Information Nondiscrimination Act of 2008, the Family and 
Medical Leave Act, ERISA's fiduciary provisions, and State law.'').
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Title I of the ADA

    Title I of the ADA prohibits discrimination against individuals on 
the basis of disability ``in regard to . . . employment compensation . 
. . and other terms, conditions, and privileges of employment,'' 
including ``fringe benefits available by virtue of employment, whether 
or not administered by the covered entity.'' \18\

[[Page 21662]]

The ADA also requires employers to provide reasonable accommodations 
(modifications or adjustments) to enable individuals with disabilities 
to have equal access to the fringe benefits offered to individuals 
without disabilities.\19\ Additionally, the ADA restricts employers 
from obtaining medical information from employees by generally 
prohibiting them from making disability-related inquiries or requiring 
medical examinations.\20\ The statute, however, provides an exception 
to this rule by stating that ``[a] covered entity may conduct voluntary 
medical examinations, including voluntary medical histories, which are 
part of an employee health program available to employees at that work 
site.'' \21\ Employee health programs include workplace wellness 
programs. In previous guidance on disability-related inquiries and 
medical examinations under the ADA, EEOC stated that: ``A wellness 
program is `voluntary' as long as an employer neither requires 
participation nor penalizes employees who do not participate.'' \22\ 
However, neither the statute nor EEOC's regulations address the extent 
to which incentives might affect the voluntary nature of a wellness 
program.
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    \18\ See 42 U.S.C. 12112(a) and 29 CFR 1630.4(a)(1)(vi). Title I 
of the ADA applies to individuals and covered entities other than 
employees and employers, including employment agencies, labor 
organizations, and joint-labor management committees. See 42 U.S.C. 
12111(2), 12111(4), 12111(5), and 12112(b) (describing the 
prohibited practices of each of these entities); see also 29 CFR 
1630.2(b) (definition of covered entity) and 29 CFR 1630.4(a)(1) 
(description of prohibited practices). Although employers generally 
will be the ADA covered entities that offer wellness programs, this 
preamble, the proposed rule, and the interpretive guidance 
accompanying the proposed rule frequently use the term ``covered 
entity,'' as that term appears throughout EEOC's entire ADA 
regulation. The term ``covered entity'' also has a different meaning 
for purposes of the HIPAA Privacy, Security, and Breach Notification 
Rules, as explained later in this preamble. The proposed rule uses 
the term ``HIPAA covered entity'' when discussing HIPAA privacy 
requirements that apply to the group health plan.
    \19\ 42 U.S.C. 12112(b)(5)(A) and 29 CFR 1630.9 (prohibiting 
covered entity from failing to provide reasonable accommodations 
absent undue hardship); 29 CFR 1630.2(o)(1)(iii) (reasonable 
accommodation includes modifications and adjustments that enable a 
covered entity's employees to enjoy ``equal benefits and privileges 
of employment.'')
    \20\ 42 U.S.C. 12112(d)(4)(A) (a covered entity ``shall not 
require a medical examination and shall not make inquiries of an 
employee as to whether such employee is an individual with a 
disability or as to the nature or severity of the disability, unless 
such examination or inquiry is shown to be job-related and 
consistent with business necessity.''). EEOC refers to the types of 
inquiries prohibited by the ADA as ``disability-related inquiries'' 
and has issued guidance on what constitutes such an inquiry. See 
Enforcement Guidance on Disability-Related Inquiries and Medical 
Examinations of Employees Under the Americans with Disabilities Act, 
Q&A 1 (July 27, 2000), available at http://www.eeoc.gov/policy/docs/guidance-inquiries.html (hereafter ``Guidance'').
    \21\ 42 U.S.C. 12112(d)(4)(B).
    \22\ See Guidance, at Q&A 22.
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The Interaction of Title I of the ADA and HIPAA's Nondiscrimination 
Provisions, as Amended by the Affordable Care Act

    The Commission's interpretation of the term ``voluntary'' in the 
ADA's disability-related inquiries and medical examinations provision 
is central to the interaction between the ADA and HIPAA's wellness 
program provisions, as amended by the Affordable Care Act. A plausible 
reading of ``voluntary'' in isolation is that covered entities can only 
offer de minimis rewards or penalties to employees for their 
participation (or nonparticipation) in wellness programs that include 
disability-related inquiries and medical examinations. That reading, 
however, would make many wellness program incentives tied to the 
disclosure of health information or the completion of medical 
examinations expressly permitted by HIPAA impermissible under the ADA. 
Although it is clear that compliance with the standards in HIPAA is not 
determinative of compliance with the ADA,\23\ the Commission believes 
that it has a responsibility to interpret the ADA in a manner that 
reflects both the ADA's goal of limiting employer access to medical 
information and HIPAA's and the Affordable Care Act's provisions 
promoting wellness programs.
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    \23\ See 78 FR at 33168 (noting that HIPAA compliance is not 
determinative of ADA compliance); see also PHS Act section 
2705(j)(3)(A) (noting that wellness programs complying with the 
HIPAA requirements ``shall not violate this section'' of the Act).
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    Accordingly, the Commission concludes that allowing certain 
incentives related to wellness programs, while limiting them to prevent 
economic coercion that could render provision of medical information 
involuntary, is the best way to effectuate the purposes of the wellness 
program provisions of both laws.\24\ One purpose of the ADA's provision 
applicable to employee health programs is to allow such programs access 
to medical information where employees voluntarily provide that 
information.\25\ One purpose of HIPAA's nondiscrimination provisions 
governing wellness programs is to ensure that wellness programs do not 
offer incentives so large as to have the effect of denying coverage or 
creating too heavy a financial penalty for individuals who do not meet 
certain health standards.\26\ HIPAA's nondiscrimination provisions 
governing wellness programs, however, do not include provisions like 
those in the ADA that limit the kinds of medical information employers 
may ask employees to provide through disability-related inquiries or 
medical examinations.
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    \24\ The Commission does not believe that the ADA's ``safe 
harbor'' provision applicable to insurance, as interpreted by the 
court in Seff v. Broward County, 778 F. Supp. 2d 1370 (S.D. Fla. 
2011), affirmed, 691 F.3d 1221 (11th Cir. 2012), is the proper basis 
for finding wellness program incentives permissible. The ADA 
contains a clear ``safe harbor'' for wellness programs--the 
``voluntary'' provision at 42 U.S.C. 12112(d)(4)(B). See H.R. Rep. 
101-485, pt. 2, at 51 (``A growing number of employers today are 
offering voluntary wellness programs in the workplace. These 
programs often include medical screening for high blood pressure, 
weight control, cancer detection, and the like. As long as the 
programs are voluntary and the medical records are maintained in a 
confidential manner and not used for the purpose of limiting health 
insurance eligibility or of preventing occupational advancement, 
these activities would fall within the purview of accepted 
activities.''). Reading the insurance safe harbor as exempting these 
programs from coverage would render the ``voluntary'' provision 
superfluous.
    \25\ See id. at H.R. Rep. 101-485, pt. 2, at 51.
    \26\ 71 FR 75014, 75018 (December 13, 2006).
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    The proposed rule explains what an employee health program is, what 
it means for an employee health program to be voluntary, what 
incentives employers may offer as part of a voluntary employee health 
program, and what requirements apply concerning notice and 
confidentiality of medical information obtained as part of voluntary 
employee health programs. In addition, the proposed rule explains that 
compliance with rules concerning voluntary employee health programs 
does not ensure compliance with all the antidiscrimination laws EEOC 
enforces.
    The proposed rule clarifies that an employer may offer limited 
incentives up to a maximum of 30 percent of the total cost of employee-
only coverage, whether in the form of a reward or penalty, to promote 
an employee's participation in a wellness program that includes 
disability-related inquiries or medical examinations as long as 
participation is voluntary. As noted below, EEOC seeks comment on 
whether additional protections for low-income employees are needed. 
Voluntary means that a covered entity: (1) Does not require employees 
to participate; (2) does not deny coverage under any of its group 
health plans or particular benefits packages within a group health plan 
for non-participation or limit the extent of such coverage (except 
pursuant to allowed incentives); and (3) does not take any adverse 
employment action or retaliate against, interfere with, coerce, 
intimidate, or threaten employees within the meaning of Section 503 of 
the ADA, at 42 U.S.C. 12203.
    Further, to ensure that participation in a wellness program that 
includes disability-related inquiries and/or medical examinations, and 
that is part of a group health plan, is truly voluntary, an employer 
must provide a notice that clearly explains what medical information 
will be obtained, who will receive the medical information, how the 
medical

[[Page 21663]]

information will be used, the restrictions on its disclosure, and the 
methods the covered entity will employ to prevent improper disclosure 
of the medical information. Finally, the proposed rule allows the 
disclosure of medical information obtained by wellness programs to 
employers only in aggregate form, except as needed to administer the 
health plan. The proposed rule does not implicate disability-related 
inquiries or medical examinations outside the context of a voluntary 
wellness program.

Summary of Proposed Revisions

    The proposed rule re-asserts the Commission's position, based on 
the language of the ADA, that employee health programs that include 
disability-related inquiries or medical examinations (including 
inquiries or medical examinations that are part of a HRA or medical 
history) must be voluntary and clarifies the application of that rule 
in light of the amendments made to HIPAA by the Affordable Care Act.
    Proposed section 1630.14(d)(1) says that an employee health 
program, including any disability-related inquiries and medical 
examinations that are part of such a program, must be reasonably 
designed to promote health or prevent disease. This standard is similar 
to the standard under the tri-agency regulations applicable to health-
contingent wellness programs.\27\ In order to meet the standard, the 
program must have a reasonable chance of improving the health of, or 
preventing disease in, participating employees, and must not be overly 
burdensome, a subterfuge for violating the ADA or other laws 
prohibiting employment discrimination, or highly suspect in the method 
chosen to promote health or prevent disease. The interpretive guidance 
offers examples of programs that would and would not meet this 
standard.
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    \27\ See 26 CFR 54.9802-1(f)(3)(iii); 29 CFR 
2590.702(f)(3)(iii); 45 CFR 146.121(f)(iii).
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    Section 1630.14(d)(2)(i)-(iii) explains that, for a program to be 
considered voluntary, a covered entity may not require an employee to 
participate in such a program and may not deny coverage under any of 
its group health plans or particular benefits packages within a group 
health plan, generally may not limit the extent of such coverage, and 
may not take any other adverse action against employees who refuse to 
participate in an employee health program or fail to achieve certain 
health outcomes. Additionally, an employer may not retaliate against, 
interfere with, coerce, intimidate, or threaten employees in violation 
of Section 503 of the ADA, at 42 U.S.C. 12203 (e.g., by coercing an 
employee to participate in an employee health program or threatening to 
discipline an employee who does not participate).
    Section 1630.14(d)(2)(iv) says that for an employee's participation 
in a wellness program that is part of a group health plan to be deemed 
voluntary, a covered entity must provide a notice clearly explaining 
what medical information will be obtained, how the medical information 
will be used, who will receive the medical information, the 
restrictions on its disclosure, and the methods the covered entity uses 
to prevent improper disclosure of medical information.
    Section 1630.14(d)(3) clarifies that the offer of limited 
incentives to participate in wellness programs that are part of a group 
health plan and that include disability-related inquiries and/or 
medical examinations, will not render the program involuntary. However, 
the total allowable incentive available under all programs (both 
participatory programs and health-contingent programs) may not exceed 
30 percent of the total cost of employee-only coverage, which generally 
is the maximum allowable incentive available under HIPAA and the 
Affordable Care Act for health-contingent wellness programs.\28\
---------------------------------------------------------------------------

    \28\ The interpretive guidance accompanying the proposed rule as 
well as question 6 below address the application of incentives 
related to smoking cessation programs.
---------------------------------------------------------------------------

    The EEOC proposes to extend the 30 percent limit set under HIPAA 
and the Affordable Care Act to include participatory wellness programs 
that ask an employee to respond to a disability-related inquiry or 
undergo a medical examination. HIPAA and Affordable Care Act wellness 
program provisions are limited to regulating what constitutes 
discrimination based on a health factor. As long as an incentive for a 
participatory wellness program is available to all similarly situated 
employees, regardless of any health factor, the incentive will not 
violate HIPAA and the Affordable Care Act. By contrast, the ADA rules 
concerning disability-related inquiries and medical examinations of 
employees limit the circumstances under which employers may obtain 
medical information from employees and the type of information that may 
be sought. For this reason, EEOC has determined that placing limits on 
the rewards employers may offer for employee participation (or 
penalties for non-participation) where participation requires employees 
to answer disability-related inquiries or take medical examinations 
promotes the ADA's interest in ensuring that incentive limits are not 
so high as to make participation in the program involuntary. At the 
same time, these limits comport with HIPAA and the Affordable Care Act 
wellness program provisions.
    The EEOC has not changed any of the exceptions to confidentiality 
set out in section 1630.14(d). The Commission, however, proposes to add 
a new subsection, 1630.14(d)(6), concerning the confidentiality and use 
of medical information gathered in the course of providing voluntary 
health services to employees, including information collected as part 
of an employee's participation in an employee health program. This 
subsection states that medical information collected through an 
employee health program only may be provided to a covered entity under 
the ADA in aggregate terms that do not disclose, or are not reasonably 
likely to disclose, the identity of specific individuals, except as 
needed to administer the health plan and except as permitted under 
1630.14(d)(4). The interpretive guidance explains that both employers 
that sponsor wellness programs and administrators of wellness programs 
acting as agents of employers have obligations to ensure compliance 
with this provision.
    Further, the interpretive guidance explains that where a wellness 
program is part of a group health plan, the individually identifiable 
health information collected from or created about participants as part 
of the wellness program is protected health information under the HIPAA 
Privacy, Security, and Breach Notification Rules. See 45 CFR part 160 
and Part 164. The HIPAA Privacy, Security, and Breach Notification 
Rules apply to HIPAA covered entities, which include group health 
plans, and generally protect the individually identifiable health 
information maintained by or on behalf of such entities. Accordingly, 
the interpretative guidance provides that where a wellness program is 
part of a group health plan and required to comply with HIPAA, its 
obligation to comply with section 1630.14(d)(6) generally may be 
satisfied by adhering to the HIPAA Privacy Rule. Thus, when an employer 
that is a health plan sponsor performing plan administration receives 
individually identifiable health information from or on behalf of the 
group health plan, as permitted by HIPAA, it generally satisfies its 
requirement to comply with section 1630.14(d)(6) by certifying to the 
group

[[Page 21664]]

health plan, as provided by 45 CFR 164.504(f)(2)(ii), that it will not 
use or disclose the information for purposes not permitted by its group 
health plan documents and the HIPAA Privacy Rule and abiding by that 
certification. If an employer is not performing plan administration on 
behalf of the group health plan, then the aggregate information that 
the employer may receive from the wellness program under section 
1630.14(d)(6) must be de-identified in accordance with the HIPAA 
Privacy Rule. Further, other disclosures of protected health 
information from the wellness program may only be made in accordance 
with the Privacy Rule. Thus, certain disclosures that are otherwise 
permitted under 1630.14(d)(4) for employee health programs generally 
may not be permissible under the Privacy Rule for wellness programs 
that are part of a group health plan without the written authorization 
of the individual.
    Section 1630.14(d)(7) clarifies that compliance with paragraph (d) 
of this section, including the proposed limit on incentives under the 
ADA, does not relieve a covered entity of its obligation to comply with 
other employment nondiscrimination laws. Thus, for example, as the 
interpretive guidance accompanying the proposed rule explains, even if 
an employer's wellness program complies with the incentive limits set 
forth in the ADA regulations, the employer would violate Title VII or 
the Age Discrimination in Employment Act (ADEA) if that program 
discriminates on the basis of race, sex, national origin, or age, or 
any other grounds prohibited by those statutes.
    Employee health programs that do not include disability-related 
inquiries or medical examinations, such as those that provide employees 
with general health information and education programs are not subject 
to the incentive rules discussed here. Like other benefit programs 
offered by covered entities, however, these programs must not 
discriminate against employees with disabilities. This 
nondiscrimination requirement includes providing reasonable 
accommodations that enable employees with disabilities to fully 
participate in employee health programs and earn any reward or avoid 
any penalty offered as part of those programs.\29\
---------------------------------------------------------------------------

    \29\ Additionally, as discussed earlier in this preamble, the 
regulations under HIPAA and the Affordable Care Act require that an 
activity-only program allow a reasonable alternative standard (or 
waiver of the otherwise applicable standard) for obtaining the 
reward for any individual for whom, for that period, it is 
unreasonably difficult due to a medical condition to satisfy the 
otherwise applicable standard, or for whom it is medically 
inadvisable to attempt to satisfy the otherwise applicable standard. 
Similarly, an outcome-based program must allow a reasonable 
alternative standard (or waiver of the otherwise applicable 
standard) for obtaining the reward to any individual who does not 
meet the initial standard based on a measurement, test, or 
screening.
---------------------------------------------------------------------------

    This revision will require renumbering 29 CFR 1630.14(d).
    The Commission invites written comments from members of the public 
on any issues related to this proposed rule, including general comments 
about wellness programs or about particular practices that might 
violate the ADA or other laws enforced by the EEOC. In addition, the 
Commission specifically requests comments on several issues:
    (1) Whether the way in which the Commission reconciles the ADA's 
``voluntary'' requirement with the wellness program provisions in the 
Affordable Care Act is appropriate given the intent behind both 
provisions. Specifically, the Commission seeks comment on:
    (a) Whether to be ``voluntary'' under the ADA, entities that offer 
incentives to encourage employees to disclose medical information must 
also offer similar incentives to persons who choose not to disclose 
such information, but who instead provide certification from a medical 
professional stating that the employee is under the care of a physician 
and that any medical risks identified by that physician are under 
active treatment.
    (b) Whether to be considered ``voluntary'' under the ADA, the 
incentives provided in a wellness program that asks employees to 
respond to disability-related inquiries and/or undergo medical 
examinations may not be so large as to render health insurance coverage 
unaffordable under the Affordable Care Act and therefore in effect 
coercive for an employee. Specifically, the Commission seeks input on 
whether it would be appropriate for the Commission to provide that the 
incentives employers offer to employees to promote participation in 
wellness programs must not render the cost of health insurance 
unaffordable to employees within the meaning of 26 U.S.C. 36B (c)(2)(C) 
as implemented by 26 CFR 54.4980H-5(e). Generally, the cost of health 
insurance is affordable within the meaning of 26 U.S.C. 36B(c)(2)(C) if 
the portion an employee would have to pay for employee-only coverage 
would not exceed a specified percent of household income (9.56 percent 
in 2015). Where such incentives would render a plan unaffordable for an 
individual, it would be deemed coercive and involuntary to require that 
individual to answer disability-related inquiries and/or submit to 
medical examinations connected with the wellness program at issue.
    (c) Whether there are any methods other than those mentioned in the 
proposed regulation and the questions above by which the Commission can 
effectuate the intent of both the ``voluntary'' requirement in the ADA 
and the provisions in the Affordable Care Act intended to encourage 
workplace health promotion and disease prevention.
    (2) Should the proposed notice requirements of this rule, at 
section 1630.14(d)(2)(iv), also include a requirement that employees 
participating in wellness programs that include disability-related 
inquiries and/or medical examinations, and that are part of a group 
health plan, provide prior, written, and knowing confirmation that 
their participation is voluntary? If so, what form should such an 
authorization take? Are principles of informed consent in the medical 
context helpful in fashioning an appropriate authorization? Are there 
existing forms that could provide adequate protections, such as forms 
developed under HIPAA, forms employers already use in connection with 
wellness programs, or forms employers use to comply with Title II of 
GINA? What costs would be associated with developing an appropriate 
authorization form and/or collecting and maintaining authorization 
forms for employees who decide to participate in wellness programs?
    (3) Should the proposed notice requirement apply only to wellness 
programs that offer more than de minimis rewards or penalties to 
employees who participate (or decline to participate) in wellness 
programs that ask them to respond to disability-related inquiries and/
or undergo medical examinations? If so, how should the Commission 
define ``de minimis''?
    (4) Which best practices ensure that wellness programs are designed 
to promote health and do not operate to shift costs to employees with 
health impairments or stigmatized conditions?
    (5) Whether employers offer (or are likely to offer in the future) 
wellness programs outside of a group health plan or group health 
insurance coverage that use incentives to promote participation in such 
programs or to encourage employees to achieve certain health outcomes 
and the extent to which the ADA regulations should limit incentives 
provided as part of such programs.
    (6) What will be the practical effect of adopting the specific 
incentive limit set

[[Page 21665]]

forth in the proposed rule (rather than expressly referencing and 
incorporating the wellness-program incentive limits as they are defined 
by the Secretaries of Labor, Treasury, and Health and Human Services 
pursuant to the Affordable Care Act)? Specifically, what, if any, will 
be the impact of the proposed rule's 30-percent limit on incentives 
offered with respect to wellness programs intended to prevent or reduce 
tobacco use where such programs ask employees to respond to disability-
related inquiries and/or undergo medical examinations?

Regulatory Procedures

Executive Order 12866

    Pursuant to Executive Order 12866, EEOC has coordinated this 
proposed rule with the Office of Management and Budget. Under section 
3(f)(1) of Executive Order 12866, EEOC has determined that the proposed 
regulation will not have an annual effect on the economy of $100 
million or more, or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or state, local or tribal 
governments or communities.
    Although a detailed cost-benefit analysis of the proposed 
regulation is not required, the Commission recognizes that providing 
some information on potential costs and benefits of the rule may be 
helpful in assisting members of the public in better understanding the 
potential impact of the proposed rule. The Commission notes that the 
rule will significantly aid compliance with the ADA and with HIPAA, as 
amended by the Affordable Care Act, by employers and group health plans 
that offer wellness programs. Currently, employers face uncertainty as 
to whether providing incentives permitted by HIPAA will subject them to 
liability under the ADA. This rule will clarify that the ADA does 
permit employers to offer incentives to promote participation in 
wellness programs that include disability-related inquiries and/or 
medical examinations. We believe that a potential benefit of this rule 
is that it will enable employers to adopt wellness programs that 
include incentives with certainty about their obligations under the 
ADA. The Commission does not believe the costs associated with the rule 
are significant. Employers covered by the ADA are already required to 
comply with wellness program incentive limits for health-contingent 
wellness programs. EEOC's proposed rule differs from HIPAA's wellness 
program incentives only in that it extends the 30 percent limit on 
incentives under health-contingent wellness programs to participatory 
wellness programs. HIPAA, as amended by the Affordable Care Act, places 
no limits on incentives for participatory wellness programs. As the 
incentives offered by the vast majority of employers currently fall 
below the limit of 30 percent of the cost of self-only coverage, the 
Commission does not believe the rule will negatively affect the ability 
of employers to offer incentives sufficient to promote meaningful 
participation in wellness programs.
    The only other potential cost is associated with the requirement 
that employers provide a notice to employees informing them what 
medical information will be obtained, how it will be used, who will 
receive it, and the restrictions on disclosure. For the reasons set 
forth in the Paperwork Reduction Act analysis that follows, the 
Commission concludes that approximately 299,115 employers will need to 
develop such a notice. The Commission estimates the time required to 
develop the notice to be four hours, for a total of 1,196,460 hours. 
According to data from the Bureau of Labor Statistics, the average 
hourly compensation for employees in ``management, professional, and 
related'' occupations was $55.56 as of December 2014, and the average 
hourly compensation for employees working in ``office and 
administrative support'' was $23.98. See Bureau of Labor Statistics, 
Employer Costs for Employee Compensation--December 2014 (March 11, 
2015), available at www.bls.gov/news.release/pdf/ecec.pdf. Assuming 
that 50 percent of the time required to develop an appropriate notice 
is attributable to employees working in management, professional, and 
related occupations and that 50 percent of the time is attributable to 
employees working in office and administrative support, the Commission 
estimates that the total cost of developing a notice that complies with 
the requirements of the proposed rule would be $42,583,000. We note 
that some employers and group health plans may already have notices 
that comply with these requirements, and that those that do not will 
incur only a one-time cost to develop an appropriate notice. The 
Commission seeks comments on these cost estimates.
    Other requirements in the rule will result in no costs, since they 
simply restate basic principles of nondiscrimination under the ADA. 
Even in the absence of this rule, employers are prohibited from 
requiring employees to participate in employee health programs that 
include disability-related inquiries and/or medical examinations; 
denying employees health insurance (or any other benefit of employment) 
if they do not participate in wellness programs; retaliating against 
employees who file charges claiming that a wellness program violates 
the ADA; and attempting to induce participation in employee health 
programs through interference with their ADA rights, coercion, 
intimidation, and threats. Employers are also required to provide 
reasonable accommodations to enable employees to enjoy equal benefits 
and privileges of employment, which would include participation in 
employee health programs. To the extent confidentiality of medical 
information acquired in the course of providing an employee health 
program is required, the proposed rule will result in no additional 
costs. The ADA already requires employers to keep medical information 
about applicants and employees confidential.
    To the extent the proposed rule can be read to impose additional 
confidentiality obligations, the interpretive guidance to the rule 
makes clear that a wellness program that is part of a group health plan 
may generally satisfy its obligation to comply with proposed section 
1630.14(d)(6) by adhering to the HIPAA Privacy Rule. See 45 CFR part 
160 and Part 164, Subparts A and E. An employer that is a health plan 
sponsor and receives individually identifiable health information from 
or on behalf of the group health plan, as permitted by HIPAA when the 
plan sponsor is administering aspects of the plan, may generally comply 
with the proposed rule by certifying to the group health plan, also 
pursuant to the HIPAA Privacy Rule, that it will not use or disclose 
the information for purposes not permitted by its plan documents and 
the Privacy Rule, such as for employment purposes, and abiding by that 
certification. Further, if an employer is not performing plan 
administration functions on behalf of the group health plan, then the 
employer may receive aggregate information from the wellness program 
under section 1630.14(d)(6) only so long as it is de-identified in 
accordance with the HIPAA Privacy Rule.

Paperwork Reduction Act

    These proposed additions to EEOC's regulations contain an 
information collection requirement subject to review and approval by 
the Office of Management and Budget (OMB) under the Paperwork Reduction 
Act. As required by the Paperwork Reduction Act, the EEOC is submitting 
to OMB a

[[Page 21666]]

request for approval of the information collection requirement under 
section 3507(d) of the Act. Organizations or individuals desiring to 
submit comments for consideration by OMB on the information collection 
requirement should address them to Chad Lallemand in the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street NW., Room 10235, New Executive Office Building, 
Washington, DC 20503, or by email to OIRA_submission@omb.eop.gov.
    Copies of comments should also be sent to Bernadette Wilson, Acting 
Executive Officer, Executive Secretariat, Equal Employment Opportunity 
Commission, 131 M Street NE., Washington, DC 20507. As a convenience to 
commenters, the Executive Secretariat will accept comments totaling six 
or fewer pages via FAX transmittal. This limitation is necessary to 
assure access to the equipment. The telephone number of the fax 
receiver is (202) 663-4114. (This is not a toll-free number.) Receipt 
of FAX transmittals will not be acknowledged, except that the sender 
may request confirmation of receipt by calling the Executive 
Secretariat staff at (202) 663-4070 (voice) or (202) 663-4074 (TTY). 
(These are not toll-free numbers.) Instead of sending written comments 
to EEOC, you may submit comments and attachments electronically at 
http://www.regulations.gov, which is the Federal eRulemaking Portal. 
Follow the instructions online for submitting comments. All comments 
received through this portal will be posted without change, including 
any personal information you provide. Copies of comments submitted by 
the public to EEOC directly or through the Federal eRulemaking Portal 
will be available for review at the Commission's library between the 
hours of 9:00 a.m. and 5:00 p.m. Eastern Time or can be reviewed at 
http://www.regulations.gov.

Overview of This Information Collection

    Collection Title: Notice requirement under Title I of the ADA, 29 
CFR 1630.14(d)(2)(iv).
    OMB number: 3046-xxxx.
    Description of affected public: Employers with 15 or more employees 
that are subject to Title I of the ADA and offer wellness programs as 
part of group health plans.
    Number of respondents: 299,115.
    Initial one-time hour burden: 1,196,460.
    Annual hour burden: None.
    Number of forms: None.
    Federal cost: None.
    Abstract: The proposed rule says that a wellness program that 
includes disability-related inquiries or medical examinations and that 
is part of a group health plan must meet several requirements to be 
deemed voluntary, including providing a notice to employees informing 
them what medical information will be obtained, how it will be used, 
who will receive it, and the restrictions on disclosure.
    Burden Statement: We estimate that there are approximately 782,000 
employers with 15 or more employees subject to the ADA and, of that 
number, one half to two thirds (391,000 to 586,500) offer some type of 
wellness program.\30\ Of those employers, 32 percent to 51 percent 
require employees to complete a health risk assessment (HRA) that 
likely contains disability-related questions.\31\ Using the highest 
estimates, we assume that 299,115 (51 percent of 586,500 employers) 
will be covered by this requirement.
---------------------------------------------------------------------------

    \30\ According to the RAND Final Report, ``approximately half of 
U.S. employers offer wellness promotion initiatives.'' By contrast, 
the Kaiser Survey found that ``[s]eventy-four percent of employers 
offering health benefits'' offer at least one wellness program.
    \31\ The Kaiser Survey reports that 51 percent of large 
employers versus 32 percent of small employers ask employees to 
complete a HRA.
---------------------------------------------------------------------------

    Some employers and group health plans may already use forms that 
comply with the proposed notice requirement; therefore, the burden only 
will be on employers and group health plans that will incur a one-time 
burden to develop an appropriate notice to ensure that employees who 
provide medical information pursuant to a wellness program do so 
voluntarily. This notice may be included on or attached to any HRA 
employees are asked to complete and should explain what medical 
information will be obtained, how it will be used, who will receive it, 
and the restrictions on disclosure. Assuming that creation of such a 
document would take four hours, and assuming that 299,115 employers 
would be covered by the proposed regulation, this one-time burden would 
be 1,196,460 hours. Because employers do not have to develop a new form 
unless they collect medical information for a different purpose, they 
will be able to annually redistribute the same notice to all relevant 
employees.
    For those wishing to comment on the above information collection, 
OMB is particularly interested in comments which:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the Commission's functions, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the Commission's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.

Regulatory Flexibility Act

    Title I of the ADA applies to approximately 782,000 employers with 
15 or more employees subject to the ADA, approximately 764,233 of which 
are small firms (entities with 15-500 employees) according to data 
provided by the Small Business Administration Office of Advocacy. See 
Firm Size Data at http://www.sba.gov/advocacy/849/12162.
    The Commission certifies under 5 U.S.C. 605(b) that this proposed 
rule will not have a significant economic impact on a substantial 
number of small entities because it imposes no reporting burdens and 
only minimal costs on such firms. The proposed rule clarifies that, in 
most respects, employers who offer wellness programs that are part of 
their health plans may offer incentives to employees consistent with 
HIPAA and the Affordable Care Act without violating the ADA. The amount 
of an incentive offered for participation (alone or in combination with 
incentives offered for health-contingent wellness programs) in a 
wellness program will not render a program involuntary under the ADA as 
long as the incentive does not exceed 30 percent of the total cost of 
employee-only coverage.
    To the extent that employers will expend resources to train human 
resources staff and others on the revised rule, we note that the EEOC 
conducts extensive outreach and technical assistance programs, many of 
them at no cost to employers, to assist in the training of relevant 
personnel on EEO-related issues. For example, in FY 2013, the agency's 
outreach programs reached more than 280,000 persons through 
participation in more than 3,800 no-cost educational, training, and 
outreach events. We estimate that the typical human resources 
professional will need to dedicate, at most, 90 minutes to gain a 
satisfactory understanding of the

[[Page 21667]]

revised regulations. We further estimate that the median hourly pay 
rate of a human resources professional is approximately $48.50. See 
Bureau of Labor Statistics, Occupational Employment and Wages, May 2013 
at http://www.bls.gov/oes/current/oes113121.htm. Assuming that small 
entities have between one and five human resources professionals/
managers, we estimate that the cost per entity of providing appropriate 
training will be between approximately $72.75 and $363.75.
    EEOC does not believe that this cost will be significant for the 
impacted small entities. We urge small entities to submit comments 
concerning EEOC's estimates of the number of small entities affected, 
as well as the cost to those entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule will not result in the expenditure by state, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any one year, and it will not 
significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

List of Subjects in 29 CFR Part 1630

    Equal employment opportunity, Individuals with disabilities.

    For the Commission,

    Dated: April 13, 2015.
Bernadette B. Wilson,
Acting Executive Officer.
    For the reasons set forth in the preamble, the EEOC proposes to 
amend 29 CFR part 1630 to read as follows:

PART 1630--[AMENDED]

0
1. The authority citation for part 1630 continues to read as follows:

    Authority: 42 U.S.C. 12116 and 12205a of the American with 
Disabilities Act, as amended.

0
2. Amend Sec.  1630.14 by:
0
a. Redesignating paragraph (d)(1) as paragraph (d)(4);
0
b. Redesignating paragraph (d)(2) as paragraph (d)(5);
0
c. Adding new paragraphs (d)(1), (d)(2), (d)(3), (d)(6), and (d)(7).
    The revisions and additions read as follows:


Sec.  1630.14  Medical examinations and inquiries specifically 
permitted.

* * * * *
    (d) * * *
    (1) Employee health program. An employee health program, including 
any disability-related inquiries or medical examinations that are part 
of such program, must be reasonably designed to promote health or 
prevent disease. A program satisfies this standard if it has a 
reasonable chance of improving the health of, or preventing disease in, 
participating employees, and it is not overly burdensome, is not a 
subterfuge for violating the ADA or other laws prohibiting employment 
discrimination, and is not highly suspect in the method chosen to 
promote health or prevent disease.
    (2) Voluntary. An employee health program that includes disability-
related inquiries or medical examinations (including disability-related 
inquiries or medical examinations that are part of a health risk 
assessment) is voluntary as long as a covered entity:
    (i) Does not require employees to participate;
    (ii) Does not deny coverage under any of its group health plans or 
particular benefits packages within a group health plan for non-
participation, or limit the extent of benefits (except as allowed under 
paragraph (d)(3) of this section) for employees who do not participate;
    (iii) Does not take any adverse employment action or retaliate 
against, interfere with, coerce, intimidate, or threaten employees 
within the meaning of Section 503 of the ADA, at 42 U.S.C. 12203; and
    (iv) Where a health program is a wellness program that is part of a 
group health plan, provides employees with a notice that:
    (A) Is written so that the employee from whom medical information 
is being obtained is reasonably likely to understand it;
    (B) Describes the type of medical information that will be obtained 
and the specific purposes for which the medical information will be 
used; and
    (C) Describes the restrictions on the disclosure of the employee's 
medical information, the employer representatives or other parties with 
whom the information will be shared, and the methods that the covered 
entity will use to ensure that medical information is not improperly 
disclosed (including whether it complies with the measures set forth in 
the HIPAA regulations codified at 45 CFR parts 160 and 164).
    (3) Incentives offered for employee wellness programs that are part 
of a group health plan. The use of incentives (financial or in-kind) in 
an employee wellness program, whether in the form of a reward or 
penalty, together with the reward for any other wellness program that 
is offered as part of a group health plan (as defined in 29 U.S.C. 
1191b(a)), will not render the program involuntary if the maximum 
allowable incentive available under the program (whether the program is 
a participatory program or a health-contingent program, or some 
combination of the two, as those terms are defined in regulations at 26 
CFR 54.9802-1(f)(1)(ii) and (iii), 29 CFR 2590.702(f)(1)(ii) and (iii), 
and 45 CFR 146.121(f)(1)(ii) and (iii), respectively) does not exceed 
30 percent of the total cost of employee-only coverage.
* * * * *
    (6) Except as permitted under paragraph (d)(4) and as is necessary 
to administer the health plan, information obtained under paragraph (d) 
of this section regarding the medical information or history of any 
individual may only be provided to an ADA covered entity in aggregate 
terms that do not disclose, or are not reasonably likely to disclose, 
the identity of any employee.
    (7) Compliance with the requirements of paragraph (d) of this 
section, including the limit on incentives under the ADA, does not 
relieve a covered entity from the obligation to comply in all respects 
with the nondiscrimination provisions of Title VII of the Civil Rights 
Act of 1964, 42 U.S.C. 2000e et seq., the Equal Pay Act of 1963, 29 
U.S.C. 206(d), the Age Discrimination in Employment Act of 1967, 29 
U.S.C. 621 et seq., Title II of the Genetic Information 
Nondiscrimination Act of 2008, 42 U.S.C. 2000ff, et seq., or other 
sections of Title I of the ADA.
0
3. In the Appendix to Part 1630 revise Section 1630.14(d), to read as 
follows:

Appendix to Part 1630--Interpretive Guidance on Title I of the 
Americans With Disabilities Act

* * * * *

Section 1630.14 Medical Examinations and Inquiries Specifically 
Permitted

Section 1630.14(d)(1): Health Program

    Part 1630 permits voluntary medical examinations and inquiries, 
including voluntary medical histories, as part of employee health 
programs. These health programs include wellness programs, which 
often incorporate, for example: A health risk assessment (HRA) 
(consisting of a medical questionnaire, with or without medical 
examinations, to determine risk factors); medical screening for high 
blood pressure, cholesterol, or glucose; classes to help employees 
stop smoking or lose weight; physical activities in which employees 
can engage (such as walking or exercising daily); coaching to help 
employees meet health goals; and/or the administration of 
prescription drugs (like insulin). Many employers offer wellness 
programs as part of a group health plan as a means of improving 
overall employee health with the goal of realizing lower health care 
costs.

[[Page 21668]]

    It is not sufficient for a covered entity merely to claim that 
its collection of medical information is part of a wellness program; 
the program, including any disability-related inquiries and medical 
examinations that are part of such program, must be reasonably 
designed to promote health or prevent disease. In order to meet this 
standard, the program must have a reasonable chance of improving the 
health of, or preventing disease in, participating employees, and 
must not be overly burdensome, a subterfuge for violating the ADA or 
other laws prohibiting employment discrimination, or highly suspect 
in the method chosen to promote health or prevent disease. 
Conducting a HRA and/or a biometric screening of employees for the 
purpose of alerting them to health risks of which they may have been 
unaware would meet this standard, as would the use of aggregate 
information from employee HRAs by an employer to design and offer 
health programs aimed at specific conditions that are prevalent in 
the workplace. An employer might conclude from aggregate 
information, for example, that a significant number of its employees 
have diabetes or high blood pressure and might design specific 
programs that would enable employees to treat or manage these 
conditions. On the other hand, collecting medical information on a 
health questionnaire without providing employees follow-up 
information or advice, such as providing feedback about risk factors 
or using aggregate information to design programs or treat any 
specific conditions, would not be reasonably designed to promote 
health. Additionally, a program is not reasonably designed to 
promote health or prevent disease if it imposes, as a condition to 
obtaining a reward, an overly burdensome amount of time for 
participation, requires unreasonably intrusive procedures, or places 
significant costs related to medical examinations on employees. A 
program also is not reasonably designed if it exists mainly to shift 
costs from the covered entity to targeted employees based on their 
health.

Section 1630.14(d)(2): Definition of ``Voluntary''

    Section 1630.14(d)(2)(i)-(iii) of this part says that 
participation in employee health programs that include disability-
related inquiries or medical examinations (such as disability-
related inquiries or medical examinations that are part of a HRA) 
must be voluntary in order to comply with the ADA. This means that 
covered entities may not require employees to participate in such 
programs, may not deny employees access to health coverage under any 
of its group health plans or particular benefits packages within a 
group health plan for non-participation, may not limit coverage 
under their health plans for such employees, except to the extent 
the limitation (e.g., having to pay a higher deductible) may be the 
result of forgoing a financial incentive permissible under paragraph 
(d)(3), and may not take any other adverse action against employees 
who choose not to answer disability-related inquiries or submit to 
medical examinations. Additionally, covered entities may not 
retaliate against, interfere with, coerce, intimidate, or threaten 
employees within the meaning of Section 503 of the ADA, at 42 U.S.C. 
12203. For example, an employer may not retaliate against an 
employee who refused to participate in a health program or filed a 
charge with the EEOC concerning the program, may not coerce an 
employee into participating in a health program or into giving the 
employer access to medical information collected as part of the 
program, and may not threaten an employee with discipline if the 
employee does not participate in a health program. See 42 U.S.C. 
12203(a) and (b); 29 CFR 1630.12.
    Section 1630.14(d)(2)(iv) of this part also states that for a 
wellness program that is part of a group health plan to be 
voluntary, an employer must provide employees with a notice clearly 
explaining what medical information will be obtained, how the 
medical information will be used, who will receive the medical 
information, the restrictions on its disclosure, and the methods the 
covered entity uses to prevent improper disclosure of medical 
information.

Section 1630.14(d)(3): Limitations on Incentives

    The ADA, interpreted in light of the Health Insurance 
Portability and Accountability Act (HIPAA), as amended by the 
Affordable Care Act, does not prohibit the use of incentives to 
encourage participation in employee health programs, but it does 
place limits on them. In general, the use of limited incentives 
(which include both financial and in-kind incentives, such as time-
off awards, prizes, or other items of value) in a wellness program 
that is part of a group health plan or group health insurance 
coverage will not render a wellness program involuntary. However, 
the maximum allowable incentive for a participatory program that 
involves asking disability-related questions or conducting medical 
examinations (such as having employees complete a HRA) or for a 
health-contingent program that requires participants to satisfy a 
standard related to a health factor may not exceed 30 percent of the 
total cost of employee-only coverage. Thus, for example, for 
purposes of compliance with these provisions under the ADA, suppose 
a group health plan under which an employee is enrolled has a total 
annual premium for employee-only coverage of $5,000 (which includes 
both the employer's and employee's contributions toward coverage). 
The plan provides a $250 reward to employees who complete a HRA 
(this reward is given to any participant who completes the HRA, 
without regard to the health issues identified as part of the 
assessment). The plan also offers a health-contingent wellness 
program to promote cardiovascular health, with an opportunity to 
earn a $1,500 reward. An employee who satisfies both components of 
the program could earn a total reward of $1,750. Such a reward would 
violate the ADA because the total reward available exceeds 30 
percent of the total cost of coverage. However, if the employer 
offered no reward for completing the HRA and a $1,500 reward for 
achieving health outcomes under the wellness program (or offered 
$750 for completing the HRA and $750 for achieving health outcomes 
in the wellness program), the incentives would comply with the ADA. 
Not all wellness programs require disability-related inquiries or 
medical examinations in order to earn an incentive. Examples may 
include attending nutrition, weight loss, or smoking cessation 
classes. These types of programs are not subject to the ADA 
incentive rules discussed here, although programs that qualify as 
health-contingent programs are subject to HIPAA incentive limits.
    Under the ADA, regardless of whether a wellness program includes 
disability-related inquiries or medical examinations, reasonable 
accommodations must be provided, absent undue hardship, to enable 
employees with disabilities to earn whatever financial incentive an 
employer or other covered entity offers. Providing a reasonable 
alternative standard and notice to the employee of the availability 
of a reasonable alternative under HIPAA and the Affordable Care Act 
as part of a health-contingent program would likely fulfill a 
covered entity's obligation to provide a reasonable accommodation 
under the ADA. However, under the ADA, a covered entity would have 
to provide a reasonable accommodation for a participatory program 
even though HIPAA and the Affordable Care Act do not require such 
programs to offer a reasonable alternative standard.
    For example, an employer that offers employees a financial 
incentive to attend a nutrition class, regardless of whether they 
reach a healthy weight as a result, would have to provide a sign 
language interpreter so that an employee who is deaf and who needs 
an interpreter to understand the information communicated in the 
class could earn the incentive, as long as providing the interpreter 
would not result in undue hardship to the employer. Similarly, an 
employer would, absent undue hardship, have to provide written 
materials that are part of a wellness program in an alternate 
format, such as in large print or on computer disk, for someone with 
a vision impairment. An individual with a disability also may need a 
reasonable accommodation to participate in a wellness program that 
includes disability-related inquiries or medical examinations, 
including waiver of a generally applicable requirement. For example, 
an employer that offers a reward for completing a biometric 
screening that includes a blood draw would have to provide an 
alternative test (or certification requirement) so that an employee 
with a disability that makes drawing blood dangerous can participate 
and earn the incentive.

Application of Section 1630.14(d)(3) to Smoking Cessation Programs

    Regulations implementing the wellness provisions in HIPAA, as 
amended by the Affordable Care Act, permit covered entities to offer 
incentives as high as 50 percent of the total cost of employee 
coverage for tobacco-related wellness programs, such as smoking 
cessation programs. As noted above, the incentive rules in Section 
1630.14(d)(3) apply only to employee health programs that include 
disability-related inquiries or medical examinations. A smoking 
cessation program that merely asks employees whether

[[Page 21669]]

or not they use tobacco (or whether or not they ceased using tobacco 
upon completion of the program) is not an employee health program 
that includes disability-related inquiries or medical examinations. 
The incentive rules in Section 1630.14(d)(3) would not apply to 
incentives a covered entity could offer in connection with such a 
program. Therefore, a covered entity would be permitted to offer 
incentives as high as 50 percent of the cost of employee coverage 
for that smoking cessation program, pursuant to the regulations 
implementing HIPAA, as amended by the Affordable Care Act, without 
implicating the disability-related inquiries or medical examinations 
provision of the ADA. The ADA nondiscrimination requirements, such 
as the need to provide reasonable accommodations that provide 
employees with disabilities equal access to benefits, would still 
apply.
    By contrast, a biometric screening or other medical examination 
that tests for the presence of nicotine or tobacco is a medical 
examination. The ADA financial incentive rules discussed supra would 
therefore apply to a wellness program that included such a 
screening.

Section 1630.14(d)(4)-(6): Confidentiality

    Paragraphs (d)(4) and (d)(5) say that medical records developed 
in the course of providing voluntary health services to employees, 
including wellness programs, must be maintained in a confidential 
manner and must not be used for any purpose in violation of this 
part, such as limiting insurance eligibility. See House Labor Report 
at 75; House Judiciary Report at 43-44. Further, although an 
exception to confidentiality that tracks the language of the ADA 
itself states that information gathered in the course of providing 
employees with voluntary health services may be disclosed to 
managers and supervisors in connection with necessary work 
restrictions or accommodations, such an exception would rarely, if 
ever, apply to medical information collected as part of a wellness 
program. In addition, as described more fully below, certain 
disclosures that are permitted for employee health programs 
generally may not be permissible under the HIPAA Privacy Rule for 
wellness programs that are part of a group health plan without the 
written authorization of the individual.
    Section 1630.14(d)(6) says that a covered entity only may 
receive information collected as part of an employee health program 
in aggregate form that does not disclose, and is not reasonably 
likely to disclose, the identity of specific individuals except as 
is necessary to administer the plan or as permitted by section 
1630.14(d)(4). Notably, both employers that sponsor employee health 
programs and the employee health programs themselves (if they are 
administered by the employer or qualify as the employer's agent) are 
responsible for ensuring compliance with this provision.
    Where a wellness program is part of a group health plan, the 
individually identifiable health information collected from or 
created about participants as part of the wellness program is 
protected health information (PHI) under the HIPAA Privacy, 
Security, and Breach Notification Rules. (45 CFR parts 160 and 164.) 
The HIPAA Privacy, Security, and Breach Notification Rules apply to 
HIPAA covered entities, which include group health plans, and 
generally protect identifiable health information maintained by or 
on behalf of such entities, by among other provisions, setting 
limits and conditions on the uses and disclosures that may be made 
of such information.
    PHI is information, including demographic data that identifies 
the individual or for which there is a reasonable basis to believe 
it can be used to identify the individual (including, for example, 
address, birth date, or social security number), and that relates 
to: An individual's past, present, or future physical or mental 
health or condition; the provision of health care to the individual; 
or the past, present, or future payment for the provision of health 
care to the individual. HIPAA covered entities may not disclose PHI 
to an individual's employer except in limited circumstances. For 
example, as discussed more fully below, an employer that sponsors a 
group health plan may receive PHI to administer the plan (without 
authorization of the individual), but only if the employer certifies 
to the plan that it will safeguard the information and not 
improperly use or share the information. See Standards for Privacy 
of Individually Identifiable Health Information (``Privacy Rule''), 
Pub. L. 104-191; 45 CFR part 160 and Part 164, Subparts A and E. 
However, there are no restrictions on the use or disclosure of 
health information that has been de-identified in accordance with 
the HIPAA Privacy Rule. Individuals may file a complaint with HHS if 
a health plan fails to comply with privacy requirements and HHS may 
impose civil money penalties for noncompliance.
    A wellness program that is part of a HIPAA covered entity likely 
will be able to comply with its obligation under section 
1630.14(d)(6) by complying with the HIPAA Privacy Rule. An employer 
that is a health plan sponsor and receives individually identifiable 
health information from or on behalf of the group health plan, as 
permitted by HIPAA when the plan sponsor is administering aspects of 
the plan, may generally satisfy its requirement to comply with 
section 1630.14(d)(6) by certifying to the group health plan, as 
provided by 45 CFR 164.504(f)(2)(ii), that it will not use or 
disclose the information for purposes not permitted by its plan 
documents and the Privacy Rule, such as for employment purposes, and 
abiding by that certification. Further, if an employer is not 
performing plan administration functions on behalf of the group 
health plan, it may receive aggregate information from the wellness 
program under section 1630.14(d)(6) only so long as the information 
is de-identified in accordance with the HIPAA Privacy Rule. In 
addition, disclosures of protected health information from the 
wellness program may only be made in accordance with the Privacy 
Rule. Thus, certain disclosures that are otherwise permitted under 
section 1630.14(d)(4) for employee health programs generally may not 
be permissible under the Privacy Rule for wellness programs that are 
part of a group health plan without the written authorization of the 
individual.
    Employers and wellness program providers must take steps to 
protect the confidentiality of employee medical information provided 
as part of an employee health program. Some of the following steps 
may be required by law; others may be best practices. Proper 
training of individuals who handle medical information in the 
requirements of the HIPAA Rules, the ADA, and any other applicable 
privacy laws is critical. Employers and program providers should 
have clear privacy policies and procedures related to the 
collection, storage, and disclosure of medical information. On-line 
systems and other technology should guard against unauthorized 
access, such as through use of encryption for medical information 
stored electronically.
    As a best practice, individuals who handle medical information 
that is part of an employee health program should not be responsible 
for making decisions related to employment, such as hiring, 
termination, or discipline. Use of a third-party vendor may reduce 
the risk that medical information will be disclosed to individuals 
who make employment decisions, particularly for employers whose 
organizational structure makes it difficult to provide adequate 
safeguards. If an employer uses a third-party vendor, it should be 
familiar with the vendor's privacy policies for ensuring the 
confidentiality of medical information. Employers that administer 
their own wellness programs need adequate firewalls in place to 
prevent unintended disclosure.
    If individuals who handle medical information obtained through a 
wellness program also act as decision-makers (which may be the case 
for a small employer that administers its own wellness program), 
they may not use the information to discriminate on the basis of 
disability in violation of the ADA.
    Breaches of confidentiality should be reported to affected 
employees immediately and should be thoroughly investigated. 
Employers should make clear that individuals responsible for 
disclosures of confidential medical information will be disciplined 
and should consider discontinuing relationships with vendors 
responsible for breaches of confidentiality.

Section 1630.14(d)(7): Compliance With Other Employment 
Nondiscrimination Laws

    Finally, section 1630.14(d)(7) clarifies that compliance with 
the requirements of paragraph (d) of this section, including the 
limits on incentives applicable under the ADA, does not mean that a 
covered entity complies with other federal employment 
nondiscrimination laws, such as Title VII of the Civil Rights Act of 
1964, 42 U.S.C. 2000e et seq., the Equal Pay Act of 1963, 29 U.S.C. 
206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. 
621 et seq., Title II of the Genetic Information Nondiscrimination 
Act of 2008, 42 U.S.C. 2000ff et seq., and other sections of Title I 
of the ADA. Thus, even though an employer's wellness program might 
comply with the incentive limits set out in paragraph (d)(3), the 
employer would violate federal nondiscrimination statutes if that 
program

[[Page 21670]]

discriminates on the basis of race, sex, national origin, or age.

[FR Doc. 2015-08827 Filed 4-16-15; 11:15 am]
 BILLING CODE 6570-01-P