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EEOC Regulation of Employee Wellness Programs

Employers are increasingly offering wellness plans designed to improve employee health, enhance productivity and help control health care costs. The ACA allows employers to provide financial incentives to participants in a wellness program of as much as 30 percent of the total cost of coverage when tied to participation in the program. The Equal Employment Opportunity Commission (EEOC) finalized regulations in May 2016 governing employer wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The ADA and GINA contain exceptions the prohibition of asking employees about their own health conditions or those of their family members when that information is collected as part of a voluntary wellness program. The EEOC’s final regulations governing the treatment of employer wellness programs under the ADA and GINA are not entirely aligned with the ACA regulations. The differences between the EEOC’s rules and the ACA regulations complicate the task of designing compliant wellness programs.

The final ADA wellness regulation includes standards on what makes a wellness program “voluntary.” To be considered voluntary, an employer cannot require employee participation in the program. Nor can an employer deny coverage under any of its group health plan (or in particular benefit packages within its group health plan) for non-participation or limit the extent of benefits.

One of the most significant areas of misalignment with the ACA involves the calculation of the allowable financial incentives. Under EEOC’s rules, the total allowable incentive (financial or in-kind) cannot exceed 30 percent of the total cost of self-only coverage. In contrast, the ACA authorizes incentives of up to 30 percent of the cost of coverage in which the employee is enrolled.

Under the final GINA wellness regulations, an employer may offer a limited incentive for an employee’s spouse as part of a voluntary employer-sponsored wellness plan as long as each of the requirements concerning health or genetic services provided on a voluntary basis is met.

Consistent with the ADA final rule, the maximum total inducement for a spouse to provide information about his or her health status equals 30 percent of the total cost of the employee’s self-only coverage.

Outlook: On March 2, 2017 a legislative proposal, H.R. 1313, the Preserving Employee Wellness Programs Act to encourage and reaffirm ACA compliant employer-sponsored wellness programs was introduced. The bill seeks to provide certainty to employers offering innovative ACA-compliant employee wellness programs and to eliminate confusion for employers offering employee wellness programs that lower health insurance premiums to reward healthy lifestyle choices. 

 

On August 22, a federal court held that the EEOC’s regulation authorizing the use of financial incentives for participation in workplace wellness programs was arbitrary and capricious. In AARP v. EEOC, federal district court Judge John Bates concluded that the commission had failed to adequately justify its conclusion that incentives and penalties of up to 30 percent of the cost of an employee’s health insurance coverage does not render plan participation “involuntary,” so the commission will have to revisit the regulations and redraft. This decision is significant because it could limit the incentives employers offer to induce employees to participate in wellness programs. The EEOC announced that it expects to take until August 2018 to reconsider wellness rules and will likely issue new rules in October 2019. 

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