On Dec. 20, 2017, the U.S. District Court for the District of Columbia vacated the EEOC wellness regulations effective 2019. The decision is in response to the AARP’s lawsuit challenging the EEOC’s employer wellness program regulations. Specifically, the EEOC claims that the 30 percent wellness reward allowable under the regulations is too high and leads to discrimination of older Americans. Their argument is that a wellness program is no longer considered voluntary considering the high cost of health plans.
In August 2017, the court had ordered the EEOC to reconsider their regulations, citing “serious concerns about the agency’s reasoning regarding the GINA and ADA rules.” In September 2017, the EEOC stated that it would issue proposed regulations by August 2018 and final regulations by October 2019, with an estimated effective date of January 2021.
In the most recent ruling, the court essentially rejected the EEOC’s timeline by stating “an agency process that will not generate applicable rules until 2021 is unacceptable. Therefore, the EEOC is strongly encouraged to move up its deadline for issuing the notice of proposed rulemaking, and to engage in any other measures necessary to ensure that its new rules can be applied well before the current estimate of sometime in 2021.”
For now, the EEOC’s rules remain in place. Employer wellness programs involving a disability-related inquiry (e.g., a health risk assessment) or a medical examination (e.g., a biometric screening) are limited to a 30 percent wellness reward. A financial incentive may be provided to individuals who voluntarily provide genetic information as long as certain requirements are met. A notice must be provided to participants prior to the inquiry or examination. If the EEOC doesn’t finalize regulations in 2018, those rules would be vacated effective 2019.
Importantly, the HIPAA rules related to wellness programs (including a limitation on reward amounts, requirement to provide a reasonable alternative standard and an additional notice requirement) aren’t impacted by this court decision and remain applicable to employer-sponsored wellness programs.
Wellness programs can be effective and useful for employers wanting to promote a healthier workplace and change employee behavior. However, the rules applying to such programs can be complex. Please contact your advisor with any questions or for additional resources.