Parts of the EEOC’s Wellness Program Rules are on track to being vacated effective January 1, 2019.
BACKGROUND: The Health Insurance Portability and Accountability Act (“HIPAA”) Wellness Program Rules and the Equal Employment Opportunity Commission (“EEOC”) Wellness Program Rules establish the legal framework for how a wellness program is permitted to operate. However, portions of the EEOC Wellness Program Rules are on track to being vacated effective January 1, 2019. This is because in 2016, AARP sued the EEOC stating that it did not believe that the EEOC’s determination of what is required in order for a wellness program to be considered “voluntary” was supported. Specifically, it was demanded that the EEOC provide evidence supporting how it created its incentive limits and how the EEOC decided that those limits made a wellness program “voluntary.” But the EEOC did not provide such supporting evidence. As a result, the court ordered that the EEOC’s Wellness Program incentive limits will go away effective January 1, 2019.
This will leave a void in the wellness program landscape. Here are links to articles on this subject.
What now for wellness?
Regulatory changes will impact some employer-sponsored plans
Additional guidance could be issued by the EEOC before the end of the year. But at this point, that appears unlikely. And in light of the void created when these key provisions of the EEOC Wellness Program Rules go away, employers have to decide what approach they want to take in designing their wellness program based upon the level of risk they are comfortable with. The articles above walk through the following potential approaches:
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“Safe approach” – Discontinue wellness programs that require participants to answer disability-related inquiries (such as Health Risk Assessments) or undergo medical testing (such as Biometric Screenings/exams) in order to receive an incentive. By taking this approach, the EEOC Wellness Program Rules wouldn’t apply to the wellness program. The downside is that you also would be eliminating some of the most effective components of a wellness program.
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“Conservative approach” – Continue to offer a wellness program that involves a disability-related inquiry or medical exam, and continue following the EEOC’s regulations (specifically, the EEOC’s incentive limits), even though the incentive limits will be vacated January 1, 2019. Some say that it is unlikely that the EEOC would bring any type of suit against a company for following the rules that the EEOC itself had created. So the risk in pursuing this option may be more limited, though the risk of individual lawsuits from employees/members would still exist. The level of risk is hard to quantify with this option since the court did not say that the EEOC’s incentive limits were wrong. The issue in this court case was that the EEOC did not provide proof to support how they arrived at their incentive limits.
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“Risky approach” – Continue to offer a wellness program that involves a disability-related inquiry or medical exam, but implement incentive limits higher than the EEOC’s limits (while still staying in compliance with the less restrictive HIPAA Wellness Program Rules). There is a significant amount of risk in taking this approach.
Alternatively, employers could also design their own ‘middle-of-the-road’ approach. For example, employers could continue to offer a wellness program involving a disability-related inquiry or medical exam, and still implement some form of financial incentive, but set that incentive at an amount lower than the EEOC’s 30% threshold.
In light of the upcoming void in wellness program guidance, employers should closely examine options and determine the approach which fits the level of risk they are comfortable with.
The information above is for general informational purposes only. It does not necessarily address all specific issues and should not be construed as, nor is it intended to provide, legal or accounting advice. Questions regarding specific issues and application of these rules should be addressed by your legal counsel.