EEOC Removes Incentive Limits from Final Wellness Plan Rules

by | Jan 11, 2019 | Employment Law

OVERVIEW

On Dec. 20, 2018, the Equal Employment Opportunity Commission (EEOC) removed the incentive limits from its final wellness plan rules. The rules allowed employers to offer wellness incentives of up to 30 percent of the cost of health plan coverage.

The AARP successfully challenged the EEOC’s incentive limit by arguing that it was too high to be consistent with federal laws that require “voluntary” employee participation in wellness programs. The court vacated the EEOC’s incentive limit for employer-sponsored wellness plans, effective Jan. 1, 2019.

Consistent with the court’s decision, the EEOC has removed the incentive limit portion of its final wellness plan rules.

ACTION STEPS

Beginning Jan. 1, 2019, the final rules’ guidance on permissible incentive limits for voluntary wellness programs no longer applies. Due to this new legal uncertainty, employers should carefully consider the level of incentives they use with their wellness programs. Employers should also monitor any developments related to the EEOC’s rules.

Final Wellness Rules

Federal laws affect the design of wellness programs, including two laws enforced by the EEOC—the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

  • Under the ADA, an employer may make disability-related inquiries and require medical examinations after employment begins only if they are job-related and consistent with business necessity. However, these inquiries and exams are permitted even if not job-related and consistent with business necessity if they are part of a voluntary wellness program.
  • Under GINA, employers cannot request, require or purchase genetic information. This includes information about an employee’s genetic tests, the genetic tests of family members and the manifestation of a disease or disorder of a family member. Like the ADA, GINA includes an exception that permits employers to collect this information as part of a wellness program, as long as the provision of information is voluntary.

Neither the ADA nor GINA define the term “voluntary” in the context of wellness programs. For many years, the EEOC did not definitively address whether incentives to participate in wellness programs are permissible under the ADA and, if so, in what amount. On May 17, 2016, the EEOC issued final rules that describe how the ADA and GINA apply to employer-sponsored wellness programs. These rules became effective on Jan. 1, 2017.

  • The final ADA rule provided that incentives offered to an employee who answers disability-related questions or undergoes medical examinations as part of a wellness program may not exceed 30 percent of the total cost for self-only health plan coverage.
  • The final GINA rule clarified that an employer may offer an incentive of up to 30 percent of the total cost of self-only coverage to an employee whose spouse provides information about his or her current or past health status as part of the employer’s wellness program.