- Posted by Jessica Waltman
- On October 11, 2018
Two federal regulations that impact many employer-sponsored wellness programs are set to expire in 2019, which could have an impact on how companies design their wellness programs and set the value of participation awards moving forward. To fully understand the situation and determine if your company’s wellness program might be affected, it is critical to know a bit of history.
Last year, a federal judge ordered the Equal Employment Opportunity Commission (EEOC) to revise these two regulations that impact group wellness plans that ask participants to provide any medical history information or participate in any medical service to obtain an award, because the judge deemed the incentive limits in the rules arbitrary. When the EEOC balked at acting before 2021 to redo the regulations, the judge responded with an order vacating them on January 1, 2019. The judge strongly encouraged the EEOC to move before then to replace the old rules. A year has passed, the January 1, 2019 expiration date for the old rules is looming, and the EEOC still hasn’t produced new regulations. Since the EEOC seems unlikely to act before the end of the year, employers that offer wellness programs in 2019 need to make some compliance decisions.
The original EEOC rules were crafted to give employers a clear safe harbor to operate voluntary wellness programs that didn’t conflict with the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA). To make these programs voluntary, the EEOC determined that incentive awards for both participatory and health-contingent wellness programs that ask participants health questions or require medical exams or services needed to be no more than 30 percent of the total single employee premium, even if the employee chose family coverage. If a spouse participated and was incented to provide medical information, then each spouse could get an award up to 30 percent of the single premium. When combined with a smoking cessation program that included medical testing, the total award value could not exceed 50 percent of the single employee premium.
However, the court ruled that these amounts are arbitrary and struck down the regulations. Without it, or other guidance from the EEOC, employers no longer have an ADA or GINA safe harbor to rely on when offering a wellness program for 2019. The lack of federal guidance also makes it challenging for employers when setting the value of any wellness program awards for the year ahead.
So what wellness plan options do employer plans that previously had to abide by the EEOC rules have for 2019?
- Keep everything the same and continue to follow the EEOC rules regarding award amounts. Recognize that this course of action includes legal risks. Since the federal courts have ruled the EEOC incentive amounts inappropriate, an employer that chooses this path could risk enforcement action for operating a discriminatory wellness program. The employer could likely claim good-faith in following the old rules but would have to be prepared to potentially address contribution inequities with program participants if someone filed a complaint. The employer would also need to be attuned to any potential guidance changes the EEOC issues moving forward and be prepared to make program changes as needed.
- Stop following the EEOC rules and if the wellness program is health-contingent, follow the longstanding ACA/HIPAA wellness plan rules concerning award value. Recognize this course of action comes with different legal risks. Before the EEOC issued its regulations, wellness programs were only required to follow longstanding HIPAA/ACA wellness requirements and these rules are still in effect. The ACA/HIPAA rules only limit incentives in health-contingent outcome-based programs where an employee must meet a health goal to get an award. Unlike the EEOC rules, this guidance doesn’t restrict award value for participatory programs (for example a walking program where participants all get a free Fitbit no matter how far they walk). The ACA/HIPAA award limits are also 30% of premium value for wellness program participation and an additional 20% for smoking cessation programs. However, the basis for these limits are the overall premium a person pays for coverage, rather than the single premium coverage limits imposed by the EEOC rules, so the value of ACA/HIPAA wellness program rewards can be much higher if a person elects family coverage. An employer choosing this path can also act in good faith but runs the risk that their program could be subject to a potential legal challenge over appropriateness under the ADA and/GINA. Before the adoption of the EEOC rules, there were lawsuits filed against some businesses alledging ADA and GINA violations, and the case law on these topics is unclear. An employer making this choice would need to be attuned to any potential guidance changes the EEOC issues moving forward and be prepared to make program changes as needed.
- Offer a wellness program that does not require participants to divulge any medical history information or obtain medical services to get a reward or amend the existing program to follow this path. Follow the Affordable Care Act/HIPAA wellness plan rules if they are applicable. Many companies already operate wellness programs that do not ask for medical information or include medical services, so there are many successful operating models for employers to follow. This choice might force an employer to drop a component of their wellness program that employees like, but it would shield the employer from legal risk.
- Do not offer a wellness program at all until the EEOC provides additional guidance. This choice could deprive employees of a well-liked benefit and employers reap benefits from wellness programs too. However, it mitigates all risk.
Whatever choice an employer makes should be well documented and reflected in their plan documents.