Public Announcements

 

LEGAL & LEGISLATIVE UPDATE

Have you seen our February L&L update? 

Did You Know?

As of January 1, 2019, an employer’s use of an incentive-based wellness program, tied to insurance premiums, faces an uncertain future. That is because a 2016 EEOC provision allowing up to a 30% incentive (https://www.eeoc.gov/laws/regulations/qanda-ada-wellness-final-rule.cfm) for employee participation without the program becoming “involuntary” in violation of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). has been struck down pursuant to a 2017 court order.

 Court Decision

A federal court in Washington, D.C. agreed with an AARP filing and struck down the regulation in December 2017. The court provided lead time before the rules would become invalid so as not to disrupt 2018 programs in place. It found the EEOC’s proposed timeline to reissue new regulations was not timely (EEOC stated intent to issue new proposed regulations August 2018 and final rules August 2019 to take effect early 2021). The court said it would hold the EEOC to its intended deadline of August 2018. Therefore, the court ruling took effect on January 1, 2019. The EEOC has yet to issue newly proposed regulations.

Employer Impact

Employers in general are relying on the EEOC’s current regulations. Wellness programs designed to comply with existing rules are less likely to be challenged by federal governmental agencies. However, the court’s decision may leave room for employees to bring private lawsuits against an employer challenging under the ADA “voluntariness” of a wellness program that includes the 30% limit. An employer could defend arguing its good faith reliance on the EEOC’s regulation. For 2019 and beyond, employers designing and maintaining wellness programs should continue to monitor developments to include the issuance of new regulations.  

Employer Options

Until the EEOC proposes new rules, employers will need to decide their level of risk tolerance. Your three best options for wellness programs that are subject to the ADA or GINA generally are:

  • Highest Risk Option: Maintain wellness incentive and penalty programs that equal up to 30% of the total cost of employee-only group health plan coverage. The obvious risk: a federal court has already concluded that such a high reward/punishment could render your program involuntary and therefore in violation of the ADA and GINA.
  • Moderate Risk Option: Reduce the incentive/penalty to an amount that, regardless of an employee’s income, could be viewed as small enough for the employee’s participation to be considered voluntary.
  • Lowest Risk Option:Eliminate any wellness incentive/penalty altogether and wait for further guidance from the EEOC.

 

Planning and Consultation

The AARP v. EEOC ruling only affects wellness program elements subject to the ADA and GINA which request health information. In anticipation of further EEOC guidance, employers may provide incentives/penalties for other programs promoting healthier habits and awareness not subject to the ADA or GINA (gym memberships or lunch-n-learns).  They may still be subject to the Health Insurance Portability and Accountability Act (HIPAA) (https://www.hhs.gov/hipaa/for-professionals/privacy/workplace-wellness/index.html) and the Affordable Care Act (ACA) (https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/wellness11202012a.html) and/or be considered taxable fringe benefits. While awaiting feedback, assess your current incentives/penalties and risk tolerance. NOTE: Consult legal counsel as a part of your planning, before altering, and while implementing your wellness strategies.