EEOC Wellness Incentive Rule Removed
As expected, the part of the final ADA wellness rules related to incentives has been removed from the regulations. The rules were originally effective for plan years starting on or after Jan. 1, 2017. They limited the amount of a reward or incentive offered through an employer sponsored wellness program to 30 percent of the premium cost if the program involved a disability related inquiry or medical examination. The AARP then challenged the incentive part of the regulations arguing that the incentive differential was too high considering the high cost of health coverage and lead to discrimination against older Americans. As discussed previously, the U.S. District Court for the District of Columbia ruled in December 2017 that the relevant section of the regulations would be vacated effective 2019.
The EEOC had an opportunity to reconsider their regulations and issue revised rules. They have not done so to date. Thus, the incentive portion of the regulations are no longer in effect and are removed effective Jan. 1, 2019.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 action and remain applicable to employer-sponsored wellness programs.
Additionally, the EEOC Wellness Notice requirement was not impacted and is still required for employer sponsored programs involving a disability related inquiry (such as a health risk assessment) or medical examination (including a biometric screening). Employers who continue to impose a penalty or provide an incentive for such programs should work with outside counsel to determine next steps and guidance for their program.