District Court Orders EEOC to Reconsider Wellness Program Regulations

On Aug. 22, 2017, the U.S. District Court for D.C. issued a ruling in AARP v. EEOC, Civ. No. 16-2113 (D.D.C., Aug. 22, 2017). The AARP sued the EEOC in relation to its wellness program regulations, which took effect for plan years starting on or after Jan. 1, 2017. The regulations apply to employer-sponsored wellness programs that involve disability-related inquiries and medical examinations. They permit such programs to provide incentives up to 30 percent of the cost of coverage to participants meeting a certain health standard. If the participation is voluntary and the program meets other requirements, it will be considered in compliance with the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The AARP’s argument is that the 30 percent incentive is too punitive considering the high cost of health coverage. The result, they argue, is that the wellness program would no longer be considered voluntary and leads to the discrimination of older Americans. The EEOC argues that the incentive is appropriate and in harmony with the HIPAA wellness regulations, which permit wellness incentives up to 30 percent for non-tobacco related programs.

Specifically, the issue is whether the EEOC provided meaningful justification as to how the 30 percent incentive still meets the voluntary standard of the ADA and GINA regulations. The ruling stated “the Court can find nothing in the administrative record- or the final rule- to indicate that the agency [EEOC] considered any factors that are actually relevant to the voluntariness question.” Thus, the court ordered the EEOC to reconsider their regulations citing serious concerns about the agency's reasoning regarding the GINA and ADA rules.”

This ruling could lead the EEOC to clarify the meaning of a “voluntary” wellness program or they could provide greater justification for the existing regulations. While it is unlikely, it is possible that the EEOC could redesign the 30 percent standard for wellness programs.

We’ll continue to monitor this issue and report any developments in Compliance Corner. In the interim, the EEOC regulations related to wellness programs, as well as the HIPAA regulations, continue to apply to employer sponsored programs. Therefore, employers should continue with their compliance efforts, including maximum incentive amounts and required notifications, until any change is announced.