EEOC’s Wellness Program Rules Run into a Roadblock

Healthcare in the U.S. is a hard issue.  And it’s expensive too.  Ok, you know that.  Years ago, some employers concluded that one way to reduce healthcare costs was to figure out who might get really sick and then either not hire them, or fire them.  Really a bad idea, and one that led to passage of the Genetic Information Non-Discrimination Act (GINA) and similar state laws.

So, many employers looked to more “benign” ways to encourage healthy employees:  wellness programs.  But those programs come with their own set of complications.  Can they be “mandatory?” (No).  Can they be “voluntary?” (Sure.)  But how do you convince employees who would not otherwise gravitate to an active and healthy lifestyle to “voluntarily” do so?   One word: incentives.

And there lies the rub.  How much “incentive” can be offered before a voluntary wellness program becomes coercive and essentially mandatory?  We are talking more than a Nalgene water bottle with the company logo here.  A financial incentive, such as a discount on health care premiums for those who participate in a wellness program, can be seen as a penalty for those who choose not to do so.

Then there’s the issue of whether and employer can assess whether and to what extent an employee has been “successful” in accomplishing his or her wellness goals.  Gathering such information can run afoul of HIPAA, GINA and the ADA.

The EEOC weighed in with its regulations on the impact of wellness programs under GINA and the ADA.  These were promulgated in May 2016, took effect in July 2016 and became “applicable” on January 1, 2017.  Employer health plans for 2017 relied upon these regulations.

Of particular concern to some was the EEOC’s decision that wellness programs with participation incentives of up to 30% of the cost of employee health insurance premiums did not violate the ADA or GINA “voluntary” requirement.

Last summer, the AARP sought to stay the EEOC regulations before they took effect in January 2017, which was denied, but the court permitted the challenge in AARP v. EEOC, 226 F. Supp. 3d 7 (D.D.C. 2016).  The case then proceeded, with both parties filing motions for summary judgment.  The AARP’s argument was that the EEOC had not done enough work to provide a good reason for the 30% rule, making its regulations arbitrary and capricious.

Last week, the district court granted AARP’s motion for summary judgment, holding that the EEOC must provide additional reasons for adopting that rule.  AARP v. EEOC, No. 1:16-cv-2113 (D.D.C. Aug. 22, 2017).  The court remanded the rules to the EEOC for reconsideration but decided not to vacate them, however, since employers had relied upon them for 2017, and the mess created by having to get refunds to or recover monies from employees would be substantial.   As a result, the regulations remain in effect for wellness programs in 2017.

This is the latest decision regarding challenges to wellness programs.  Other areas of concern involve whether an employer can require a medical examination before permitting employees to participate in a program.

Employers should pay close attention to developments in this area, particularly as they consider changes they may want to make in their wellness programs for 2018.



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