Nondiscrimination Acts


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The following laws ban discrimination against protected groups in compensation and terms, conditions and privileges of employment.  These laws require that all employee benefits be provided in a nondiscriminatory manner unless a statutory exception provides otherwise.  They include:

  1. The Age Discrimination in Employment Act
  2. The Americans with Disabilities Act
  3. Title VII of the Civil Rights Act of 1964 (including the Pregnancy Discrimination Act), and
  4. The Genetic Information Nondiscrimination Act

The Health Insurance Portability and Accountability Act (“HIPAA”) also imposes rules on group health plans that prohibit discrimination based on health status factors. Employers should recognize that compliance with the HIPAA nondiscrimination rules does not imply compliance with other non-discrimination laws, and vice versa. Please see the HIPAA Compliance topic for more information.

The Affordable Care Act (ACA) extends (IRS) Section 105(h) nondiscrimination rules (relative to highly compensated individuals) to fully insured, non-grandfathered plans. These rules are not covered in this material, but you can click here for more information.

Please note that this section deals strictly with how these laws apply to group health plans. Employers should utilize other resources for compliance information on the employment related aspects of these laws.

1. The Age Discrimination in Employment Act (“ADEA”)

ADEA was enacted in 1967. The Older Workers Benefit Protection Act (OWBPA) of 1990 amended ADEA, clarifying Congress’s intent of protecting older workers.

Under ADEA, it is unlawful to discriminate against a person because of his/her age with respect to any term, condition, or privilege of employment, including hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training. This encompasses all employee benefits. ADEA does not require employers to provide health and welfare plans. However, if an employer chooses to offer these plans, ADEA requirements apply.

Covered Employers

ADEA applies to employers who have twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.


ADEA is satisfied when the benefits provided to older workers (40 years and above) are equal to the benefits provided to younger workers.

Equal Cost Rule

A summary of the equal cost rule can be found below. We recommend that an employer seek legal advice before applying this rule to its benefits.

Congress recognized that the cost of providing certain benefits to older workers is greater than the cost of providing those same benefits to younger workers, and that those greater costs would create a disincentive to hire older workers. Therefore, under certain circumstances, an employer may reduce benefits based on age, as long as the cost of providing the reduced benefits to older workers is the same as the cost of providing benefits to younger workers.

Only benefits that become more costly as employees get older may be included in the equal cost rule. These include:

Criteria for applying this rule include:

Other Provisions

Cost comparisons and adjustments can also be looked at on a benefit package basis. See paragraph (d) (2) (ii) “Benefit package” basis of Part 1625.10 of the Age Discrimination Act.  However, a benefit package approach cannot be used to justify reductions in health benefits greater than would be justified under a benefit-by-benefit approach.

In addition, special rules apply when employees contribute to the premium of a benefit, and that premium increases with age. See paragraph 4(c) of Part 1625.10 of the Age Discrimination in Employment Act.


Offsets are available to reduce benefits paid to retirees by Medicare.

However, Medicare Secondary Payer (MSP) rules stipulate that an employer may not reduce benefits to active employees as a result of their being eligible for Medicare (see Coordination of Benefits). Therefore, this offset is generally only applied to retirees.

The ADEA does allow employers to reduce, change or eliminate retiree health benefits when the retiree becomes eligible for Medicare.

2. The Americans with Disabilities Act (“ADA”)

Covered Employers

The ADA applies to employers with 15 or more employees for each working day in at least 20 calendar weeks in the current or preceding calendar year.


ADA states that an employer may not discriminate against a qualified individual with a disability, on the basis of disability, with respect to fringe benefits.

Congress recognized, however, that some types of benefit plans rest on an assessment of the risks and costs associated with various health conditions in accordance with accepted principles of risk assessment.

As a result, the ADA permits employers to make disability-based distinctions in employee benefit plans where the distinctions are based on sound actuarial principles or are related to actual or reasonably anticipated experience.

Disability Definition

For purposes of the ADA, an individual has a disability if she or she:

The law provides that it is to be construed broadly in favor of individuals.

Click here to view the new law or here for an overview.

Equal Benefits

For benefits to be equal, the same coverage must be provided, on the same terms, to all similarly situated employees. For example, benefit plans must be the same with regard to:

Disability Based Distinction

Not all provisions of an employer’s benefit plan that are related to health, and that result in unequal benefits for individuals with disabilities, are based on disability. A health-related distinction that is not disability-based, and that is applied equally to all employees, does not violate the ADA. Therefore, employers must determine whether any difference in benefits arises from a disability-based distinction.

A health-related distinction in a benefit plan is disability-based if it singles out:

Generally, a health-related distinction in a benefit plan is not disability-based if:


If an employer has made a disability-based distinction in a benefit plan, it will be liable for a violation of the ADA unless it can show that the distinction is justified. The ADA sets forth two elements to the defense.

An employer must demonstrate that:

Legitimate Actuarial Data

Even where employers can produce actuarial data that demonstrates that the risks and costs of treatment of a condition justify differential treatment of it, employers must also show that they have treated other conditions that pose the same risks and costs the same way. If there is evidence that an employer has treated other conditions differently from the disability at issue, the employer has discriminated by singling out a particular disability for disadvantageous treatment.

Other Justifications

An employer may justify a disability-based distinction by showing that:

The ADA and Wellness Programs

The ADA generally prohibits employers from requiring employees to submit to physical exams and from asking health-related questions that are likely to elicit information regarding a disability. Many wellness programs do exactly that with their screenings and wellness assessment questionnaires. However, the ADA contains an exception for voluntary employee health programs.  A long-standing question has been whether, or to what extent, the availability of incentives/penalties in connection with these programs renders them “involuntary.”

First, A Word on Scope

The rule only applies to employee health programs that ask employees to respond to disability-related inquiries and/or undergo medical examinations. This includes wellness programs that are:

Wellness programs that do not include disability-related inquiries or medical examinations (such as those that provide general health and educational information) are not subject to the final rule.  The rule does not expand on what constitutes a “disability related inquiry,” but does reference prior guidance on this question.  In our experience, health risk assessments (HRAs) featured in wellness programs typically do ask such questions.

Unlike HIPAA, the ADA rule applies without regard to whether the wellness program is also a health plan.  For example, an HRA-only program would not be covered by HIPAA but would be subject to the ADA.

The rule limits the level of incentives that can be used in a wellness program based on the cost of coverage under a given health plan. The rule applies the first day of the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the regulation.

Voluntary Participation and Incentives

For a wellness program to be considered voluntary under the ADA, the employer:

An employer may offer incentives up to a maximum of 30 percent of the total cost of self-only coverage (including both the employee’s and employer’s contribution) without causing a wellness program to be classified as involuntary.

For purposes of this limitation, the term “incentives” should be understood to include both rewards and penalties and rewards that are in-kind as well as financial.  Employers may use any reasonable method of valuing its in-kind incentives.  However, even “de minimis” incentives must be counted toward the 30% maximum.

This leaves the question of which plan an employer should use to calculate the 30% limit.  The rule details the choice of plan as follows:

Note: the reasonable accommodation rules do apply, regardless of whether a wellness program is otherwise subject to the ADA Wellness regulation.  For example:


An employer may obtain information collected as part of an employee health program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals as is necessary to administer the plan.

An employer may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information (except to the extent as necessary to carry out specific activities related to the wellness program), or waive confidentiality protections available under the ADA as a condition for participating in a wellness program or receiving a wellness program incentive.

Reasonable Program Design

Wellness programs must be “reasonably designed to promote health or prevent disease.”  Examples of when this standard may be met include:

On the other hand, a program is not reasonably designed to promote health or prevent disease if it imposes, as a condition to obtaining a reward, an overly burdensome amount of time for participation, requires unreasonably intrusive procedures, or places significant costs related to medical examinations on employees.  A program also is not reasonably designed if it exists mainly to shift costs from the covered entity to targeted employees based on their health or if it exists simply to give an employer information to estimate future health care costs.

Some Caveats and Afterthoughts

The ADA wellness rules have been challenged in several court cases.

One line of cases turns on a safe harbor provision in the ADA which states that an insurer or any entity that administers benefit plans is not prohibited from ‘‘establishing, sponsoring, observing or administering the terms of a bona fide benefit plan based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law.’’  These cases have relied on this safe harbor to uphold wellness programs that imposed penalties far in excess of those that would be permitted under the final rule.

Another case has found that a non-participation penalty that required employees to pay the entire amount of the health plan premium was nevertheless voluntary within the meaning of the ADA.

The EEOC has announced that it does not regard itself as bound by these decisions.  Employers that wish to ignore the final rules based on those cases are strongly urged to consult with counsel.

3. Title VII of the Civil Rights Act (“Title VII”)

Title VII states that health insurance benefits must be provided without regard to the race, color, sex, national origin, or religion of the insured.

Covered Employers

Title VII applies to employers with 15 or more employees for each working day in at least 20 calendar weeks in the current or preceding calendar year.


An employer must provide to all similarly situated employees the same opportunity to enroll in any health plans it offers. An employer must also ensure that the terms of its health benefits are nondiscriminatory.

The Pregnancy Discrimination Act (“PDA”)

Under PDA, women who are affected by pregnancy, childbirth or related medical conditions must be treated the same as others who are similarly able or unable to work. Where an employer offers benefits of any sort, it must cover pregnancy and related medical conditions in the same way, and to the same extent, that it covers other medical conditions.

4. The Genetic Information Nondiscrimination Act (“GINA”)

Congress passed GINA to ensure that employment and benefit decisions are not based on genetic information (including family medical history) and to encourage employees to seek genetic testing without fear of repercussions. GINA provides a baseline federal prohibition on genetic discrimination. However, if an employer’s state has laws that provide equal or greater protection, the employer must comply with the stricter state standard.

Covered Employers

GINA applies to employers with 15 or more employees for each working day in at least 20 calendar weeks in the current or preceding calendar year.


GINA prohibits group health plans from using genetic information to determine health care coverage and benefits. Genetic information cannot be used to determine eligibility, continued eligibility, contributions, premiums, or any other activity related to the creation, renewal or replacement of health benefits. Genetic information can be used, if properly obtained under limited circumstances, for purposes other than underwriting.

Genetic Information

Genetic Information is defined in three ways:

  1. An individual’s genetic tests.  A genetic test is any analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations, or chromosomal changes.
  2. The genetic tests of a family member.  A family member is broadly defined to include up to fourth-degree relatives (including half-relatives) as well as persons who are relatives by way of marriage or adoption.
  3. The manifestation of a disease or disorder in a family member.  The manifestation of a disease or disorder in an individual is not genetic information, but the manifestation of the same disease or disorder in a family member is.

GINA does not require health plans to cover specific diseases or disorders, but it prohibits the use of genetic information in determining health plan features offered as part of a group health plan.

Genetic Testing

The law also prohibits a group health plan from requesting or requiring an individual or family member from undergoing a genetic test, provided that this prohibition does not:

The law allows a group health plan to request, but not require, a participant or beneficiary to undergo a genetic test for research purposes, provided:

Under GINA’s statutory provisions, a group health plan may not:

Health Risk Assessments (“HRA”)

Final regulations applying GINA’s provisions to group health plans and insurers make clear that HRAs, which are often used in conjunction with health plan wellness programs, may no longer include questions about genetic information or family history  if an incentive (such as a premium reduction) is offered for completion of the HRA. In addition, genetic information or family history questions cannot be included on an HRA if that HRA is performed in connection with or prior to enrollment.

An employer may, in certain circumstances, offer an employee limited inducements for the employee’s spouse to provide information about the spouse’s manifestation of disease or disorder as part of an HRA administered in connection with an employer-sponsored wellness program. However, this exception does not extend to genetic information about a spouse or to information about manifestation of diseases or disorders in, or genetic information about, an employee’s children.

There are two keys to understanding this exception.  The first is to remember that it is limited to information about manifested conditions of the employee’s spouse as opposed to the much broader definition of genetic information generally; and that the exception never applies to the employee’s children (including adult children).  The second is that it is the spouse that must provide his or her own information.

An employer may not refuse coverage under any of its health insurance programs or retaliate against an employee, based on a spouse’s refusal to provide information about his or her manifestation of disease or disorder to an employer-sponsored wellness program.

In addition, an employer may not condition participation in a wellness program or an inducement on any individual’s agreement to the sale, exchange, sharing, transfer, or other disclosure of genetic information.

Most of the additional requirements under GINA track the ADA requirements closely and so will only be mentioned summarily below.


Inducements (meaning both penalties and rewards, financial or in-kind) may not exceed 30% of the cost of self-only coverage under the employer’s health plan.  If the employer does not sponsor a group health plan, then the reference point is the cost of self-only coverage under the second lowest-cost Silver Plan available through an Exchange in the employer’s principal place of business.

Unlike the ADA, which only applies to employee discrimination, GINA permits an inducement equal to 30% of the applicable cost of self-only coverage for a spouse who provides information about his or her manifestation of a disease or disorder.


When an employer offers an employee an inducement in return for his or her spouse’s providing information about the spouse’s manifestation of disease or disorder as part of an HRA (which may include a medical questionnaire, a medical examination, or both), the same written authorization requirements apply to the spouse as to the employee.   These include the requirement that the authorization must be written so that the individual from whom the genetic information is being obtained is reasonably likely to understand it; describe the type of genetic information that will be obtained and the general purposes for which it will be used; and describe the restrictions on disclosure of genetic information.

Reasonable Design

A wellness program must be reasonably designed to promote health or prevent disease.  This means that the program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals.  It may not be overly burdensome, a subterfuge for violating GINA or other laws prohibiting employment discrimination, and may not be highly suspect in the method chosen to promote health or prevent disease.

For example, an employer may not deny an employee an inducement for participation of either the employee or the spouse in an employer-sponsored wellness program because the employee’s spouse has blood pressure, a cholesterol level, or a blood glucose level that the employer considers too high.  In addition, a program consisting of a measurement, test, screening, or collection of health-related information without providing participants with results, follow-up information, or advice designed to improve the participant’s health is not reasonably designed to promote health or prevent disease, unless the collected information actually is used to design a program that addresses at least a subset of conditions identified.

To ensure compliance with GINA and its regulations, group health plan sponsors should take the following actions:

In answering this question, you should not include any genetic information. That is, please do not include any family information related to genetic testing, genetic services, genetic counseling, or genetic diseases for which you believe you may be at risk.

Additional Resources


EEOC Web Site

Part 1625.10 of the Age Discrimination in Employment Act (Cost and benefits under employee benefit plans)

EEOC Compliance Manual: ADEA Issues


ADA Home Page

EEOC Compliance Manual: ADA Issues

Calculating Incentive Limits for Wellness Programs

Title VII of the Civil Rights Act

Text of Title VII of the Civil Rights Act of 1964

EEOC Compliance Manual: Title VII Issues


EEOC Web Site

EEOC Compliance Manual: Discrimination based on Pregnancy


Text of Genetic Information Nondiscrimination Act

National Human Genome Research Institute Web Site

Regulations as published in the Federal Register

Calculating Incentive Limits for Wellness Programs