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EEOC issues proposed rule on the ADA and wellness

May 11, 2015 / 7 min read

On April 16, 2015, the U.S. Equal Employment Opportunity Commission (EEOC) released a proposed rule that describes how the Americans with Disabilities Act (ADA) applies to employee wellness programs that include questions about employees’ health or medical examinations. Although the ADA limits when employers may inquire about employees’ health or require them to undergo medical examinations, these inquiries and exams are permitted if they are part of a voluntary wellness program.

The long-awaited proposed rule would provide much needed guidance for employers on how to structure employee wellness programs without violating the ADA. Most importantly, the proposed rule addresses the amount of incentives that may be offered under employee wellness programs that are part of group health plans. This amount is generally consistent with HIPAA’s limits on wellness program incentives, although the proposed rule does not fully incorporate HIPAA’s increased incentive limit for tobacco cessation programs.

Implications for employers

The EEOC is seeking comments on the proposed rule and may make revisions to its guidance before it is finalized. While employers are not required to comply with the proposed rule before it is finalized, they may choose to do so. According to the EEOC, it is unlikely that a court or the EEOC would find an ADA violation where an employer complied with the proposed guidance until a final rule is issued.

Wellness programs

Many employers offer workplace wellness programs as a way to help control healthcare costs, encourage healthier lifestyles, and prevent disease.

Employers may offer participatory wellness programs, which do not require individuals to meet a health-related standard in order to obtain an incentive. Participatory wellness programs include, for example, subsidized fitness club memberships, reimbursement of smoking cessation classes (without regard to whether the employee quits smoking), or rewards for completing a health risk assessment (HRA) without any further action required by the employee with respect to the health issues identified by the HRA.

Employers may also offer health-contingent wellness programs, which require individuals to satisfy a standard related to a health factor in order to obtain an incentive. For example, health-contingent wellness programs may require participants to participate in exercise programs, remain tobacco-free, or attain certain results on biometric screenings (for example, low cholesterol, blood glucose, and blood pressure levels) to obtain an incentive.

Wellness program incentives can be framed as rewards or penalties and often take the form of prizes, cash, or a reduction or increase in healthcare premiums or cost-sharing.

Legal concerns for wellness programs

Employee wellness programs must be carefully designed to comply with the ADA and other federal laws that prohibit discrimination based on race, color, sex (including pregnancy), national origin, religion, compensation, age, or genetic information.

Additionally, wellness programs that are part of group health plans must be designed to comply with HIPAA’s nondiscrimination requirements, as amended by the Affordable Care Act (ACA). Under HIPAA, health-contingent wellness programs are required to follow certain standards related to nondiscrimination, including a standard that limits the amount of incentives that can be offered. The maximum reward under HIPAA for health-contingent wellness programs is 30 percent of the cost of health coverage (or 50 percent for programs designed to prevent or reduce tobacco use).

EEOC guidance


The ADA prohibits employers with 15 or more employees from discriminating against individuals with disabilities. Under the ADA, an employer may make disability-related inquiries and require medical examinations after employment begins only if they are jobrelated and consistent with business necessity. However, these inquiries and exams are permitted if they are part of a voluntary wellness program.

Neither the ADA nor prior EEOC guidance addressed the extent to which incentives affected the voluntary nature of a wellness program. Recently, the EEOC filed well-publicized lawsuits against a number of employers, alleging that their wellness programs violated the ADA and other federal fair employment laws. In response, Congress called on the EEOC to issue guidance on wellness programs and introduced legislation, the Preserving Employee Wellness Program Act, to provide more certainty for employers regarding wellness programs.

Proposed guidance

The EEOC’s proposed rule would establish the following parameters for permissible wellness program designs under the ADA.

Wellness programs that are part of a group health plan may generally comply with their obligation to keep medical information confidential by complying with the HIPAA Privacy Rule. Employers that are not HIPAA covered entities may generally comply with the ADA by signing a certification, as provided for by HIPAA regulations, that they will not use or disclose individually identifiable medical information for employment purposes and abiding by that certification.

Practices such as training individuals in the handling of confidential medical information, encryption of information in electronic form, and prompt reporting of breaches in confidentiality can help assure employees that their medical information is being handled properly.

The information provided is only a general summary and is being distributed with the understanding that PM Group Benefit Advisors II, LLC is not providing legal, tax, accounting, or other professional advice, position, or opinions on specific facts or matters and, accordingly assumes no liability whatsoever in connection with its use. Content ©2013 Zywave, Inc. All rights reserved.

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