Government clarifies rules for work wellness programs

WASHINGTON - Federal regulators Thursday proposed limits on how employers use financial penalties and rewards to nudge staff to participate in fast-growing workplace wellness programs.

The Equal Employment Opportunity Commission -- which enforces laws against discrimination -- said Thursday that employers can use financial incentives up to 30 percent of the cost of premiums for single coverage, provided certain other safeguards are met.

Business groups and advocates for people with disabilities are closely watching the issue. Workplace programs that encourage workers to lose weight, quit smoking, get active and better manage stress are spreading throughout American businesses. Employers look for ways to cut costs associated with chronic illnesses, which are often tied to lifestyle.

The 30-percent standard was set in President Barack Obama's health care overhaul law.

For example, if the total premium paid by the employer and employee for single coverage is $5,000, rewards or penalties for participating in a wellness program under that plan cannot exceed $1,500.

After the health care overhaul passed in 2010, questions arose about potential conflicts with the Americans with Disabilities Act, or ADA, which dates back to 1990 and protects people with chronic conditions against workplace discrimination. That law says wellness programs have to be voluntary.

The employment commission is trying to balance how the two laws can work together.

The proposed regulation says that wellness programs are permitted under the ADA, but employers cannot use them to discriminate based on a worker's disability. Many wellness programs require employees to complete a health risk assessment questionnaire, and talk the results over with a counselor. Some require employees to take specific actions, such as losing weight or getting blood pressure down to recommended levels.

The regulation says employers cannot see individual medical information that is collected as part of that process. While aggregate results can be disclosed to employer, the wellness program must keep individual information confidential.

Commission Chairwoman Jenny R. Yang said in a statement the goal is to "harmonize" the workings of different federal laws that address the issue.

"Medical inquiries and exams that are part of an employee health program must be voluntary," said Yang. At the same time, "allowing incentives to encourage participation in wellness programs" is permitted by federal law.