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EEOC Withdraws Permission for Wellness Incentives

Jan. 7, 2019
It may turn out that wellness incentives are more trouble than they are worth for employers.

As of Jan. 1, the Equal Employment Opportunity Commission (EEOC) has removed its former regulations that permitted employers to offer incentives to employees for their participation in wellness programs.

In 2016, the commission issued regulations relating to wellness programs and how participation could be considered “voluntary” for purposes of the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. One requirement limited incentives under the wellness program to 30% of the cost of health coverage for them to qualify as a “voluntary” employee health program.

Although the ADA and GINA Wellness Program Rules faced a number of court challenges, a lawsuit brought by the AARP argued that EEOC had failed to demonstrate how offering employees discounts of up to 30% of their health coverage (which meant imposing penalties of up to 30% for nonparticipation) would still allow the wellness programs to truly be considered voluntary for employees.

In late 2017, the U.S. District Court for the District of Columbia agreed with AARP and ruled that the rules regarding the 30% incentive would be vacated effective Jan. 1, 2019. However, the EEOC waited until last November for moving to rescind the vacated incentive rules. That may seem to be the end of the story for employers, but it’s not.

“In doing so, the EEOC left employers back in the quandary they were in before,” says attorney Patricia Anderson Pryor of the law firm Jackson Lewis. “Neither the law, nor the remaining regulations, expressly prohibit (or permit) incentives.”

The remaining regulations provide that an employee health program including disability-related inquiries or medical examinations (including disability-related inquiries or medical examinations that are part of a health risk assessment) is voluntary as long as a covered entity:

● Does not require employees to participate.

● Does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation or limit the extent of benefits for employees who do not participate.

● Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees.

● Provides employees with a notice that is understandable by the employee, describes the medical information gathered and how it will be used, including how its dissemination will be restricted.

Does offering an incentive—any incentive—violate these rules? “Only time will tell,” Pryor notes. EEOC earlier announced plans to issue new regulations by this June. In addition, the courts had only just begun analyzing this issue when the earlier regulations were issued. “In the meantime, every employer’s 2019 New Year’s resolution may need to include reviewing their wellness programs with counsel.” Or just forego having such incentives at all.

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