American Benefits Council
Benefits Byte


October 29, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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EEOC Proposes Wellness, Genetic Nondiscrimination Rules Under GINA Title II

The Equal Employment Opportunity Commission has released proposed regulations governing Title II of the Genetic Information Nondiscrimination Act (GINA) and its application to employer wellness programs.

Title II of GINA restricts how employers may collect and disclose genetic information and prohibits employers from using genetic information in employment decisions. In the absence of regulatory certainty on these matters, the EEOC had pursued litigation against some employers – drawing public criticism from the Council – alleging that the employers were violating GINA and the Americans with Disabilities Act (ADA) The Council also testified in hearings before the U.S. Senate Health, Education, Labor and Pensions (HELP) Committee and the House of Representatives Education and Workforce Subcommittee earlier this year emphasizing the need for regulatory clarity.

In April, the EEOC issued proposed regulations governing Title I of the ADA, providing guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/ or medical examinations. These regulations have not yet been finalized. In June 19 written comments to the EEOC, the Council urged the U.S. Equal Employment Opportunity Commission (EEOC) to ensure that the regulations regarding employer wellness programs are consistent with HIPAA, the Affordable Care Act (ACA) and congressional intent, to provide for consistent federal policy with respect to wellness programs.

Included in the Council’s comments was a recommendation that the EEOC, when issuing future guidance on the applicability of the Genetic Information Non-Discrimination Act (GINA), provide a safe harbor related to the sponsoring of spousal Health Risk Assessments (HRAs) by employers.

The new proposed rule states “Currently, employers face uncertainty as to whether providing an employee with an inducement if his or her spouse provides information about the spouse’s current or past health status on a HRA will subject them to liability under Title II of GINA. This rule will clarify that offering limited inducements in these circumstances is permitted by Title II of GINA” if certain requirements of GINA have otherwise been met.

Noteworthy provisions of the proposed regulations include:

  • Employers may request, require, or purchase genetic information as part of health or genetic services only when those services are reasonably designed to promote health or prevent disease. Per the preamble language, this means that the program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals, and must not be overly burdensome, a subterfuge for violating GINA Title II or other law prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease. Collecting information on a health questionnaire without providing follow-up information or advice would not be reasonably designed to promote health or prevent disease.
  • The employer cannot impose, as a condition of obtaining a reward, an overly burdensome amount of time for participation, require unreasonably intrusive procedures, or place significant costs related to medical examinations on employees.
  • An employer may offer, as part of its health plan, an inducement to an employee whose spouse (1) is covered under the employee’s health plan, (2) receives health or genetic services offered by the employer, including as part of a wellness program; and (3) provides information about his or her current or past health status as part of a health risk assessment. However, there can be no inducement for the spouse providing his or her own genetic information, including results of his or her genetic tests.
  • Inducements in exchange for current or past health status information about an employee’s children (biological or not) are not permitted, although an employer may offer health or genetic services (including participation in a wellness program) to an employee’s children on a voluntary basis and may ask questions about a child’s current or past health status as part of providing such services.
  • A health risk assessment, which may include a medical questionnaire, a medical examination (e.g., to detect high blood pressure or cholesterol), or both, must otherwise comply with the existing GINA II regulations in the same manner as if completed by the employee, including the requirement that the spouse provide knowing, voluntary, and written authorization when the spouse is providing his/her own genetic information, and the requirement that the authorization form describe the confidentiality protections and restrictions on the disclosure of genetic information. Separate authorization from the employee is not required.
  • The total inducement to the employee and spouse may not exceed 30 percent of the total annual cost of coverage for the plan in which the employee and any dependents are enrolled. This includes any inducement for a spouse’s current/past health status plus any other inducements to the employee as permitted under the ADA for the employee’s participation in a wellness program that asks disability-related questions or includes medical examinations. The maximum share of the inducement attributable to the employee’s participation in an employer wellness program is 30 percent of the cost of self-only coverage, which is consistent with the ADA proposed wellness regulations. The remainder of the inducement – 30 percent of the total cost of coverage for the plan in which the employee and any dependents are enrolled minus 30 percent of the cost of self-only coverage – may be provided in exchange for the spouse proving information to an employer wellness program(s) about his/her current or past health status.
  • An employer cannot condition participation in a wellness program or an inducement on an employee (or the employee’s spouse or other covered dependent) agreeing to the sale of genetic information or waiving unpermitted disclosure of genetic information.
  • “Inducements” include both financial and in-kind incentives (e.g., time off awards and prizes).

Comments on the proposal are due December 29. The proposed regulations specifically request comment on any issues related to the proposed rule and several specific issues related to the use of inducements, application of the rule to electronically stored records, whether the rules should apply only to wellness programs that offer more than “de minimis” rewards or penalties and whether employers offer (or are likely to offer) wellness programs outside of group health plans or insurance and the extent to which GINA regulations should allow inducements provides by such programs.

For more information, or to provide input for a Council comment letter, contact Katy Spangler, senior vice president, health policy, or Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

Senate Subcommittee Discusses Expanding Multiple Employer Plans

In a roundtable hearing on October 28, the American Benefits Council joined members of the U.S. Senate Health, Education, Labor and Pensions (HELP) Subcommittee on Primary Health and Retirement Security and several other witnesses in examining ways to improve retirement plan coverage for employees at small businesses.

The primary focus of the hearing was the potential expansion of “multiple employer plans” (MEPs) in which small entities can join together to pool plan assets and reduce the cost of plan administration. Currently, MEPs require a “nexus” or bona fide relationship between each adopting employer to consider a MEP a single plan and permit certain administrative and expense efficiencies, such as a single 5500 filing and plan audit.

In the Council’s long-term strategic plan, A 2020 Vision, recommended changing the MEP rules to facilitate groupings of unrelated employers – permitting so-called “open MEPs” – thereby increasing access to retirement plans. The Senate Finance Committee’s Savings & Investment Bipartisan Tax Working Group’s July 2015 report endorsed this concept.

Subcommittee Chairman Michael Enzi (R-WY), voiced his agreement when convening the hearing, saying that “access to [MEPs] can and should be broadened to provide small businesses with administrative simplicity.” Enzi specifically asked the roundtable participants to provide policy recommendations for expanding MEPs, indicate what the federal government can do to expand coverage in small businesses and elaborate on any statutory or regulatory impediments to such efforts.

Testifying on behalf of the Council was Lance Schoening, Director of Product Management for Principal Financial Group and a member of the Council’s Policy Board of Directors. Schoening’s written statement reiterated the Council’s support for open MEPs, while also encouraging the expansion of automatic enrollment and escalation features in retirement plans and tax incentives for small business plan creation.

Schoening specifically endorsed the creation of a “streamlined, simplified, auto-feature safe harbor” that uses a common employer match formula – a 50 percent match on six percent of pay. This recommendation was also included in A 2020 Vision.

The following witnesses also participated in the roundtable:

  • Scott Anderson, owner of Static Peak (a small business in Jackson , Wyoming) representing the U.S. Chamber of Commerce
  • John J. Kalamarides, Senior Vice President Of Institutional Investment Solutions for Prudential Retirement (also a Council Policy Board member company)
  • David Certner, Legislative Counsel and Legislative Policy Director for AARP

There was broad agreement among the committee members and panelists that open MEPs represent a strong opportunity to improve retirement coverage. With regard to implementation, there was some discussion about where fiduciary liability should rest and how to minimize costs to participating employers.

Regarding regulatory obstacles to retirement coverage generally, Anderson suggested eliminating unnecessary top-heavy rules, simplifying nondiscrimination testing and streamlining disclosure requirements.

Schoening, Kalamarides and Anderson added that easing the contraints on electronic communication would also be helpful, although Certner suggested that important communications should be distributed in paper format as well.

Schoening’s fellow panelists supported his recommendation for enhancing small business plan tax incentives and added that expanding the Saver’s credit would also be a positive step.

Enzi asked the panel if the various state-sponsored retirement plans are more or less helpful than an open MEP solution. Certner voiced his support for state plans, but Kalamarides stated his support for a federal approach, noting that MEPs could allow for employer matches and higher contribution limits than many of the state plan designs. Schoening added that many of the state plan designs would likely not allow for sufficient adequacy in retirement.

Roundtable participants also cited a number of present and past legislative proposals that could alleviate coverage and administrative pressures on employers.

  • Kalamarides and others expressed support for the Lifetime Income Disclosure Act (S. 1317), introduced by Senators Johnny Isakson (R-GA) and Christopher Murphy (D-CT). The measure would require that sponsors of 401(k) and other defined contribution plans subject to ERISA inform participants of how their account balance would translate into guaranteed monthly payments based on age at retirement and other factors.
  • Senator Sheldon Whitehouse (D-RI) asked for reactions to his Automatic IRA Act of 2015 (S. 245), which would mandate automatic enrollment in IRAs for employees who currently do not have access to an employer-sponsored retirement plan. Certner expressed support for this concept, while Schoening and Anderson voiced concern about the effect of a “one-size-fits-all” mandate.

The panelists agreed that a legislative measure combining many of these concepts is the appropriate next step. Certner suggested that, when crafting such legislation, Congress should consult with the regulatory agencies to ensure that they have proper enforcement authority.

Enzi expressed confidence that there is sufficient bipartisan support for a non-controversial measure, though he did not lay out a timeline for development and consideration of such a bill. The Council will continue to work with Enzi and other lawmakers as discussions continue. For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

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