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What do HIPAA, ADA, and GINA Say About Wellness Programs and Incentives?

By Brian Schilling

According to a recent survey, employers today devote nearly 2 percent of their overall health care dollars to corporate wellness programs.1 If recent legislative action is any guide, the federal government would like to see that figure increase. The Patient Protection and Affordable Care Act of 2010 included numerous provisions—dedicated funding, tax breaks, etc.—to promote wellness initiatives. In 2014, the Affordable Care Act also increases the maximum allowable incentives employers can offer workers to get them to participate in wellness programs.2 Employers have taken note: mid- to large-sized firms now offer, on average, 21 different health promotion programs. Nearly 60 percent offer cash incentives to participate.3

But that's only half the picture. Experts say that a lack of clarity around the applicability of three different federal acts designed to protect consumers against discrimination—the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the Genetic Information Nondiscrimination Act (GINA) of 2008, and the Americans with Disabilities Act (ADA) of 1990—may represent an unintended barrier to investment and innovation in the field of corporate wellness.

"There's a pretty big disconnect between the government's efforts to promote wellness and the regulatory haze in which wellness programs currently operate," said Gretchen Young, senior vice president of health policy for the ERISA (Employee Retirement Income Security Act) Industry Committee, a nonprofit association that works to advance interests of the retirement, health, and compensation plans of large employers. "It's probably keeping a lot of firms on the sidelines with respect to expanding or investing in wellness programs."

Kirk Nahra, a partner at the law firm of Wiley, Rein, and Fielding and specialist in health care law, shares that sentiment and notes that expanding the allowable wellness program incentive limit (from 20% of premiums to 30% in 2014) may not have the desired effect unless the rules around incentives are clarified.

"The tension between the desire for wellness programs that really work and the restrictions on what those programs can do is problematic," said Nahra. "Confusion is an obstacle to these programs being as effective as possible."

Below is a brief summary of issues, challenges, and unanswered questions.

Among the many goals of HIPAA, a central aim was to prohibit employers from discriminating against employees on the basis of adverse health factors. To that end, HIPAA makes it illegal for health plans and other vendors to send personally identifiable health care information to employers. HIPAA also set the current incentive cap at 20 percent of premiums, a limit that was designed to ensure that incentives did not become so large that they would effectively deny coverage or unfairly penalize individuals who could not satisfy a particular wellness program standard. For instance, a $5,000 incentive given to employees who achieve a specified wellness-related goal might be construed as a penalty by individuals who could not achieve that goal or an alternative standard.

It is unclear as whether the increased incentive cap (as of 2014) will be available to grandfathered plans that were in place when the PPACA was passed and are excused from complying with several aspects of the new law. It is also unclear whether a grandfathered plan will lose its status as such if it chooses to institute an incentive larger than 20 percent.

Young doesn't know whether these aspects of the law will be ironed out any time soon, but does say, "This is really a common sense issue. I don't think the point of the Affordable Care Act was to restrict access to a really valuable benefits tool to plans created after 2010."

The landmark Americans with Disabilities Act prohibits discrimination against disabled individuals in any aspect of employment. The Act essentially bars most employers from requiring medical examinations or gathering medical information about current or prospective employees, but does allow employers to offer voluntary medical examinations or request voluntary medical histories as long as collected information is kept confidential and isn't used for discriminatory purposes. Since 2000, it has been understood that voluntary wellness programs did not violate ADA restrictions. But in 2009 the Equal Employment Opportunity Commission (EEOC), which oversees ADA compliance, warned that workplace wellness programs featuring an incentive larger than 20 percent might violate the ADA even if they fully comply with all other HIPAA requirements. That puts the EEOC at odds with Congress and the Accountable Care Act, both of which have made clear that 30 percent incentives do not prevent a wellness program from being voluntary for purposes of HIPAA.

Young notes that reconciling issues around allowable incentive levels may become even thornier if those levels go up to the 50 percent maximum allowed by the Affordable Care Act (at the discretion of the departments of Labor, Treasury, and Health and Human Services). "I don't know at what point a particular incentive level makes a wellness program mandatory instead of voluntary. Also, it's not clear whether negative incentives are allowable or if only rewards may be used," said Young. "What employers need is a clear, consistent message about what they're allowed to do."

The intent of the Genetic Information Nondiscrimination Act is to prohibit health plans from denying coverage or disparately charging individuals based on a genetic predisposition to developing certain diseases or conditions in the future. Similarly, the legislation bars employers from using genetic information when making hiring, firing, or promotion decisions. Language in the Act has been interpreted more than once by the EEOC, and the departments of Treasury, Labor, and Health and Human Services to mean that employers can't offer any financial incentive to encourage employees to voluntarily provide a family medical history as part of an initial health risk assessment, a key tool in helping employees to understand their health risks. This interpretation is plainly contradictory to findings by the Center for Medicare and Medicaid Services that show financial incentives are necessary to encourage individuals to participate in wellness activities.4

Young's group—the ERISA Industry Committee—is lobbying the federal government to rethink its interpretation of the GINA statute and issue a clarifying statement saying that voluntary programs to encourage employees to provide family medical histories do not violate GINA.
While the involved agencies don't offer any time frame for issuing further guidance on these issues, Nahra remains optimistic that wellness programs have a bright and perhaps clearer future. "There's no bad law here. ADA, GINA, and HIPAA are all good pieces of legislation. We just need to reconcile our interpretations so we can advance the common goal of promoting wellness and getting people the help they need."

1 Unnamed survey of 121 employers conducted between September 11, 2009 and October 5, 2009 by Fidelity Investments and the National Business Group on Health, For details, visit 
2 Ibid.
3 Ibid.
4 Ibid.

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