Guest Article

(From the November 2, 2009 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Employer Health Risk Assessments & Wellness Programs -- Still Viable?

The last few months have seen significant inroads into the ability of employers to provide incentives for employees to complete health risk assessments. The recent GINA regulations make clear that rewards (e.g., financial incentives, benefit eligibility) cannot be given for providing "genetic information" (e.g., family medical history). And EEOC informal discussion letters advise that health risk assessments cannot be a precondition to participation in the employer's group health plans.

GINA Severely Limits the Ability to Request "Genetic Information"

Recently released interim final regulations under the Genetic Information Nondiscrimination Act of 2008 (GINA) -- which become effective for plan years beginning after December 7, 2009 -- make clear that employers will violate the HIPAA privacy rule and face potentially significant penalties if they request family medical history (or other information that falls within GINA's broad definition of "genetic information) for underwriting purposes or prior to or in connection with enrollment in a group health plan.

The regulations broadly define "underwriting purposes" to include changing a group health plan's deductibles, or providing discounts, rebates, or other premium differential mechanisms in return for participating in a health risk assessment or other wellness program. It also includes rules for determining eligibility for benefits, such as in connection with participation in disease management programs.

The term "genetic information" includes not only family medical history, but also genetic tests and genetic services. However, genetic information that is provided incidental to the collection of other information, and which is not used for underwriting purposes, is generally exempted from the prohibition against the collection of genetic information prior to or in connection with enrollment. But, to be eligible for this exemption, the collection of the genetic information must be incidental to the collection of other information -- and, if it is reasonable to believe that health information will be provided in response to a request, the collection of genetic information in that circumstance would not be incidental unless the request explicitly states that genetic information should not be provided.

The following examples from the GINA regulations illustrate how these restrictions would apply to employer health risk assessments:

See 74 Federal Register at 51586, or the GINA interim final regulations at Treas. Reg. § 54.9802-3T(d)(3).

Thus, the GINA regulations prohibit the conditioning of financial incentives or eligibility for additional benefits (e.g., under a disease management program) on the disclosure of family medical history or other genetic information. However, as illustrated in the fourth example above, a post-enrollment financial incentive can be provided in connection with the disclosure of individual health information (which does not include genetic information such as family medical history). Under a separate health risk assessment, which does not provide any financial incentive or eligibility for additional benefits, a request can be made for family medical history and other genetic information.

ADA Restricts Disability-Related Inquiries

Approaching the issue from a different angle, the Equal Employment Opportunity Commission (EEOC) this year issued two "informal discussion" letters that address the use of health risk assessments under the Americans with Disabilities Act (ADA).

A March 6, 2009, letter advised that an employer would violate the ADA if it required its employees to take a health risk assessment as a prerequisite for obtaining coverage under the employer's group health plan. EEOC advised that this would be the case even though the results of the assessment (i.e., a short health-related questionnaire, a blood pressure test, and a blood panel screen) were disclosed exclusively to the employee (and only aggregate health information was provided to the employer). According to the EEOC, the ADA allows employers to make disability-related inquiries or to require medical examinations only if they are job-related and consistent with business necessity. Requiring employees to take a health risk assessment that includes disability-related inquiries and a medical examination as a prerequisite for obtaining health coverage does not appear to be job related and consistent with business necessity according to the EEOC. Therefore, the requirement violated the ADA.

The EOC went on to explain that, while disability-related inquiries and medical examinations are permitted under the ADA as part of a voluntary wellness program, a program is not voluntary if an employee who decides not to participate is penalized. Since non-participating employees were penalized by not being by not being able to obtain coverage under the employer's group health plan, the program was not voluntary.

The EEOC reaffirmed this line of reasoning in a more recent letter it issued on August 10, 2009. In that letter, the EEOC advised that under the ADA employees could not be required to complete a health risk assessment in order to receive monies from an employer-funded health reimbursement arrangement. As with its earlier analysis, the EEOC concluded that requiring employees to complete a health risk assessment (that included disability-related inquiries) as a prerequisite for the reimbursements was not job related and consistent with business necessity. Again, the program was not voluntary because any employee who did not complete the questionnaire was penalized by not being eligible to receive the reimbursements.

Health Risk Assessments under the Current Regulatory Landscape

Both GINA and the ADA impose significant restrictions on employee health risk assessments. GINA prohibits altogether a request for genetic information prior to or in connection with enrollment in a group health plan. An HRA given in that circumstance needs to be carefully reviewed to make sure it requests no genetic information, and that any genetic information which may be disclosed falls within the "incidental disclosure" exception. After enrollment, GINA allows a request for genetic information (e.g., family medical history), but not for underwriting purposes. If a financial incentive (e.g., premium reduction or discount) or eligibility for additional benefits (e.g., eligibility for a disease management program) is provided in return for providing the genetic information, the request is considered to be for underwriting purposes and will violate GINA.

The ADA allows employers to make disability-related inquiries or to require medical examinations of employees only if they are job related and consistent with business necessity. As a result, it prohibits disability-related inquiries and medical examinations that are a precondition for enrollment in a group health plan or health reimbursement arrangement. The ADA will allow disability-related inquiries and medical examinations as part of a voluntary wellness program -- but a "voluntary" program means the employee cannot be penalized for the failure to participate.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2009, Deloitte.