The Sophisticated Employer Blog

Do you remember how you struggled with creating a wellness plan for your workforce until the Equal Employment Opportunity Commission (EEOC) published its final Wellness Rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) in May 2016? 

Ah, a sigh of relief.  You could finally develop your wellness program and offer employees incentives to keep your healthcare costs down without running afoul of either federal law if you followed the rules. Take a deep breath because a key provision of these final rules has been scrapped.

A wellness program is intended to help keep the cost of healthcare benefits down by encouraging employees to become healthier by quitting smoking, exercising at a gym, losing weight, eating healthier, etc. The concern, if you recall, is that in order to participate, employees generally need to respond to disability-related inquiries about themselves and/or their spouse and could be required to submit to a medical examination. Both the ADA and the GINA restrict an employer’s ability to make disability-related inquiries or to require medical examinations.

However, under the final rule, such inquiries and examinations were permitted if they were part of an employee health program that was reasonably designed to promote health or prevent disease and participation is voluntary. But, is participation truly voluntary if the employee is going to pay less for health insurance if he or she participates? What if it is significantly less? As a practical matter, is it still voluntary?

The guidance issued by the EEOC in May 2016 set the limit on the financial incentive at 30 percent of the total cost of “self only” coverage for this reason. See 42 CFR 1630.14 (d)(3) [ADA] and 29 CFR 1635.8 (b)(2)(iii) [GINA]. Employers can offer a carrot, but it can’t be a really big sweet one.

In October 2016, American Association of Retired Persons (AARP) challenged the incentive section of the final rules under the ADA and GINA in the United States District Court for the District of Columbia. In August 2017, the district court found that the EEOC failed to provide sufficient reasoning for the 30-percent incentive limit and remanded the rule back to the EEOC (without vacating it) instructing the EEOC to reconsider it.

AARP was not overly thrilled with the court’s order and filed a motion seeking to alter or amend the order. The court then vacated the incentive section of the final rules and, effective last month, 42 CFR 1630.14 (d)(3) [ADA] and 29 CFR 1635.8 (b)(2)(iii) [GINA] have been removed from the final rules.

So, what will the EEOC do next? It is hard to tell. First it has to reopen. Yep, the EEOC is one of the budget fight closures. We will stay on top of this issue, so be sure to check back.