New Wellness Program Rules

On January 15, 2019

Employers with established wellness programs that collect health information or require a medical exam can no longer rely on EEOC regulations to claim that incentives under their wellness programs are voluntary.  The EEOC recently published a final rule vacating prior rules that allowed employers to offer significant financial incentives to workers who participate in wellness programs.

The EEOC began its wellness program regulations in 2016 with rules ostensibly under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  ADA and GINA rules required employers sponsoring such programs that either collect health information or require a medical exam to satisfy certain requirements.  Chief among those EEOC requirements was the limitation of incentives of no more than 30% of the cost of health coverage.  That, according to the EEOC, allowed the wellness program to qualify as a “voluntary” health program.

A challenge brought by AARP alleged that the EEOC failed in its regulations to demonstrate how offering employees discounts of up to 30%, or imposing penalties of up to 30% on those who did not comply, made the programs truly voluntary.  A U.S. District Court Judge agreed with the AARP.  The Court held that the wellness programs rules pertaining to the 30% incentive would be vacated effective January 1, 2019.  The EEOC initially indicated it would issue new guidance.  However, no such new guidance was issued.  Instead, the EEOC late last month formally rescinded its prior regulations without more.

Some employers may choose to eliminate these incentives to avoid employee or other challenges, at least until further guidance is issued.  Those employers choosing to maintain the incentives pending further guidance should continue to keep watch for future developments from the EEOC or in the courts.

Employers should also keep in mind that, despite the rescission of the EEOC’s incentive rules, there are other ADA and GINA wellness program rules that remain in effect.  The ACA/HIPAA wellness program rules, for instance, remain in effect and provide separate rules regarding incentives.

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