****UPDATE:  These proposed regulations were not published in the Federal Register before President Biden’s inauguration.  In accordance with the Memorandum for the Heads of Executive Departments and Agencies, issued by Chief of Staff Ronald A. Klain, the proposed regulations have been withdrawn for review by the Biden administration.****

On January 7th, the EEOC released proposed new regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) for employer-offered wellness programs.  (As of January 15, 2021, the proposed regulations still have not been published in the Federal Register.)  If finalized, the proposed regulations would clarify the extent to which wellness programs that comply with separate regulations issued by the IRS, DOL and HHS on wellness plans issued under Affordable Care Act may be constructed to comply with the ADA and GINA.  It remains to be seen whether the Biden administration will move the proposal forward or go back to the drawing board.


Many employers offer wellness programs to encourage healthy habits, increase productivity, and reduce health plan costs.  Depending on the design of the program and whether incentives are offered, wellness programs raise a number of issues under various federal laws, including ERISA, HIPAA, the ADA, GINA, COBRA, and anti-discrimination laws like the ADEA and Title VII of the Civil Rights Act of 1964.  In the last 20 years, the following rules have been of particular concern for wellness programs that offer incentives, such as a discount on health plan premiums or a prize:

  1. HIPAA prohibits discrimination on the basis of a health factor (such as health status), a medical condition, medical history, or genetic information.
  2. The ADA requires reasonable accommodations for disabilities and prohibits disability-related medical examinations unless they are “voluntary.”
  3. GINA prohibits employers from requesting or using genetic information, which includes family medical history, unless the information is provided “voluntarily.”

The concern is that not providing a wellness plan incentive to someone who fails to satisfy the required conditions can be viewed as a penalty that discriminates on the basis of a health factor and/or that the opportunity cost of giving up an incentive effectively makes the program involuntary.

HIPAA Regulations

Longstanding HIPAA regulations, most recently updated in 2013 to incorporate provisions of the Affordable Care Act, provide a roadmap for a wellness program to comply with HIPAA’s non-discrimination rules.  These regulations divide wellness plans into two categories:

  • Participatory programs, under which there are no significant impediments to participation (physical or otherwise) and incentives are not conditioned on performing any activity that relates to a health factor or on achieving a health factor target. Examples of participatory programs include reimbursement for gym membership or offering an incentive to complete a health risk assessment or get a biometric screening; and
  • Health-contingent programs, where an incentive is conditioned on performing an activity related to a health factor or achieving a health factor target. A health-contingent program can be “activity-based” (where an incentive is conditioned on completing an activity related to a health factor, such as daily exercise, without any requirement to achieve a particular outcome) or “outcome-based” (where an incentive is conditioned on achieving an outcome, such as reducing cholesterol levels or BMI).

The HIPAA regulations allow incentives for participatory programs without restriction, provided they are offered to everyone, and allow health-contingent programs if the following requirements are satisfied:

  1. The program must be reasonably designed to promote health or prevent disease;
  2. The program must be made available to all similarly situated individuals and provide opportunities to qualify for the incentive at least annually;
  3. The program must offer reasonable alternatives for individuals for whom meeting the required standard (e.g., completing an exercise regimen or reducing cholesterol or BMI) is unreasonably difficult due to a medical condition; and
  4. The value of the incentive must not exceed 30% of the applicable health insurance premium (the employee-only premium if the program is offered only to employees, or a family premium if the program is offered to family members). The percentage may be up to 50% for tobacco cessation programs.

Although the HIPAA regulations provided clear standards for wellness programs, the EEOC warned that a program complying with the HIPAA regulations might not comply with separate requirements under the ADA, GINA, or other federal laws.  In particular, the EEOC warned that offering incentives to test for conditions like BMI and cholesterol might violate the ADA’s prohibition against medical examinations that are not voluntary, and that offering incentives to complete a health risk assessment that includes family medical history might violate GINA’s prohibition against involuntary collection of genetic information.

2016 EEOC Regulations Under the ADA and GINA

In 2016, the EEOC issued regulations that resolved the uncertainty under both the ADA and GINA.  Based on comments from stakeholders, the 2016 EEOC regulations said that incentives (whether as a reward or a penalty) would not make a program involuntary if the incentives were not exceedingly valuable.  For this purpose, the EEOC regulations carried over the 30% and 50% caps from the HIPAA regulations, but with slight adjustments. The 2016 EEOC regulations did not distinguish between programs offered inside or outside of the context of an employer-sponsored group health plan.

The clarity afforded by the 2016 EEOC regulations was short-lived, however.  By order of a federal judge, the regulations were vacated, because the EEOC had not provided sufficient data to support its conclusion that 30% (50% for smoking cessation) was the appropriate line to establish that a program was still voluntary.

The New EEOC Proposal

After reconsideration, the EEOC now has issued new proposed regulations under both the ADA and GINA.  The proposed regulations address the court’s concern with the 2016 regulations by specifying that any incentive that is more than de minimis would render a program involuntary.  But the proposed ADA regulation offers a new “safe harbor” that would allow health plans to offer bigger incentives to participate in certain health-contingent wellness programs—but not to provide family medical history or other genetic information—if the requirements under the HIPAA regulations are satisfied.

De Minimis Incentive Standard

The proposed regulations provide that any incentive that is more than de minimis generally renders a program involuntary.  The proposed regulations do not define “de minimis,” but they offer a few examples:  A water bottle or a gift card of “modest” value would be de minimis; but an incentive as small as $50 per month, a gym membership, or a plane ticket would exceed the de minimis threshold.

Like the 2016 regulations, the proposed regulations also prohibit employers from requiring participation, limiting coverage or benefits due to lack of participation, taking adverse action for non-participation or failure to achieve a health outcome, or requiring consent to the disclosure of information to a third party. In addition, the proposed ADA regulations maintain the requirement from the 2016 regulations that information regarding medical conditions or histories be kept confidential and maintained in separate files (with limited exceptions).  Both regulations limit the employer’s ability to receive employee information other than in aggregate form.

New ADA “Safe Harbor” for Health-Contingent Programs in Group Health Plans

As noted above, the proposed ADA regulations (but not the proposed GINA regulations) contain an important exception to the de minimis incentive limitation that is designed to align with the HIPAA framework.  This exception is based on an ADA rule that allows an entity administering a benefit plan to address underwriting risks to the extent not inconsistent with state law.  As proposed, a wellness program can qualify for this safe harbor if the following conditions are satisfied:

  1. The program is designed based on risks and not as a subterfuge to evade the purposes of the ADA’s equal employment provisions.
  2. The program is a health contingent program that is integrated into (or independently qualifies as) a group health plan that is subject to the HIPAA regulations. The proposed rules outline various factors for determining whether a program is integrated into a group health plan—for example, whether the incentive is limited to employees enrolled in the plan, whether the incentive is tied to cost sharing or premiums under the plan, whether the program’s vendor has a contract with the plan, and whether the plan includes the welfare program as a term of coverage.
  3. The value of the incentive falls within the limit set by the HIPAA rules (30% of the cost of coverage, or 50% for programs designed to reduce tobacco use).

The proposed GINA regulations do not contain a similar exception.  Accordingly, incentives that are more than de minimis may not be conditioned on an employee providing family medical or other genetic information.  (For this purpose, a spouse’s medical history generally counts as family medical information.)  For example, if an incentive is offered to complete a health risk assessment, employees would need to be told that they can qualify for the incentive even if they do not respond to the questions requesting family medical history or other genetic information.

Comments Sought

A comment period will be open for 60 days after the proposed regulations are published in the Federal Register. Specific areas about which the EEOC is seeking input include whether the regulations should include disclosure requirements, what types of incentives should be treated as de minimis, and how employers use information from health risk assessments and biometric screenings.

Proskauer Perspective

The proposed regulations balance the need to prohibit incentives that have a coercive effect, while still clearing a path wellness programs that rely on testing and health risk assessments to control plan costs.  Time will tell whether the rules are finalized in their current form.  In the meantime, employers maintaining wellness programs should consult with counsel on how best to manage compliance obligations and mitigate risk.

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Photo of Katrina McCann Katrina McCann

Katrina E. McCann is a senior counsel in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

Katrina advises a diverse group of clients on a broad spectrum of employee benefits matters, including:

  • counseling clients with respect to

Katrina E. McCann is a senior counsel in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

Katrina advises a diverse group of clients on a broad spectrum of employee benefits matters, including:

  • counseling clients with respect to the design, drafting, implementation and ongoing qualification of their qualified plans in both the single and multi-employer context, including profit sharing, money purchase, 401(k), ESOP, and defined benefit plans;
  • providing counsel on the establishment, administration and continued legal compliance of health & welfare plans and programs;
  • advising tax-exempt organizations regarding their 403(b) plans and 457 arrangements;
  • creating and advising on non-qualified plans, including deferred compensation and supplemental employee retirement plans;
  • providing technical and practical advice on compliance with ERISA, the Internal Revenue Code, the Affordable Care Act, COBRA, HIPAA, and other laws affecting employee benefit plans, as well as issues concerning plan administration, qualification requirements, correction of plan document failures, fiduciary issues and prohibited transaction issues;
  • routinely working with clients and their service providers, advising on the RFP process, reviewing provider arrangements and collaborating to develop effective and compliant disclosures, government reporting forms and participant communications;
  • analyzing the employee benefits and executive compensation issues in connection with corporate transactions, advising on withdrawal liability matters and structuring benefit plans following a transaction and providing counsel with respect to all aspects of benefit plan mergers; and
  • advising both employers and senior executives in connection with various executive compensation matters, including the negotiation and drafting of equity plans and awards, employment agreements, severance agreements and other compensation arrangements.

Katrina is a member and former co-chair of Proskauer Women’s Alliance Steering Committee and serves on the Firm’s Reproductive Rights Steering Committee. She is also a Board member of Playwrights Horizons, an off-Broadway theater dedicated to the development of contemporary American playwrights and the production of innovative new work, and a Board member of the Axe-Houghton Foundation.

Prior to joining Proskauer, Katrina served as Special Assistant to the Mayor’s Office of Pension and Investments and was Special Assistant Corporation Counsel, Pensions Division, New York City Law Department. While in law school, Katrina was the Robert M. LaFollette/Keenan Peck Legal Fellow, serving in the offices of Senator Herb Kohl & the United States Senate Committee on the Judiciary.

Photo of Seth Safra Seth Safra

Seth J. Safra is chair of Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined…

Seth J. Safra is chair of Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined benefit to cash balance and floor-offset arrangements, ESOPs and 401(k) plans—often coordinating qualified and non-qualified arrangements. He also advises tax-exempt and governmental employers on 403(b) and 457 arrangements, as well as innovative new plan designs; and he advises on ERISA compliance for investments.

On the health and welfare side, Seth helps employers provide benefits that are cost-effective and competitive. He advises on plan design, including consumer-driven health plans with HSAs, retiree medical, fringe benefits, and severance programs, ERISA preemption, and tax and other compliance issues, such as nondiscrimination and cafeteria plan rules.

Seth also advises for-profit and non-profit employers, compensation committees, and boards on executive employment, deferred compensation, change in control, and equity and other incentive arrangements. In addition, he advises on compensation and benefits in corporate transactions.

Seth represents clients before the Department of Labor, IRS and other government agencies.

Seth has been recognized by Chambers USA, The Legal 500, Best Lawyers, Law360, Human Resource Executive, Lawdragon and Super Lawyers.