Voluntary Wellness and the EEOC
Voluntary Wellness? When is an incentive so large, can it still be considered “voluntary?” If that question seems a bit abstract and difficult to answer, you are not alone. That very question was the basis for the AARP’s lawsuit against the Equal Employment Opportunity Commission (EEOC) in 2016, and it remains a point of contention still now.
At issue, the Americans with Disabilities Act (ADA) requires wellness programs involving disability or health-related inquiries or medical examinations to be entirely voluntary and non-discriminatory. But how does an employer define voluntary and non-discriminatory in practice and plan language? Unfortunately, given the EEOC’s reluctance to provide concrete guidance, many employers were left to design wellness plans based on conjecture. Understandably, when the EEOC released proposed guidance on Wellness Plans in 2016, the majority of employers saw relief in sight. Working from the proposed guidance, the EEOC was to make it official on January 1, 2017.
The proposed guidance stated employers, to maintain both voluntary and non-discriminatory plans, could not provide participating employees a discount greater than 30% of the total cost of employee-only health coverage under the employer sponsored plan. Without any explanation for setting voluntary plans at no greater than a 30% incentive, the AARP questioned the EEOC’s logic. The AARP argued a 30% discount was not only too great to be considered voluntary, but also the 30% limit was “arbitrary, capricious, and abuse of discretion, and not in accordance with law.” The Federal Court of the District of Columbia agreed and declined to void the 30% guidance effective immediately but instead ordered that the EEOC reconsider their rules and provide new guidance.
In September 2017, the EEOC proposed regulations would be unveiled in August 2018 with final rulings coming in August 2019 and an implementation date of early 2021. The Court rejected the timeline and has been pressuring the EEOC for a solution sooner.
What is the state of wellness incentives now?
In lieu of updates promised to the Court, the EEOC removed the 30% incentive language altogether and their guidance is a decided lack of guidance. With no other laws and regulations prohibiting or permitting specific incentives, employers are able to set their own incentive levels but could be open to litigation regarding wellness program design.
What do we recommend?
Aldrich Benefits LP, in conjunction with our discussions with legal counsel, recommends employers continue to comply with the now rescinded rules until new guidance is released. Current predictions for next steps from the EEOC expect the 30% incentive requirement to loosen but being conservative until guidance is released is recommended.
The EEOC planning agenda for 2019 has slated this matter for discussion and potential action. The EEOC announced it intends to issue new proposed rules by the end of 2019 and until then, Aldrich Benefits LP encourages employers to hold off on major wellness plan incentive updates.
Current regulations governing wellness plans require:
- Plan is voluntary to employees
- Plan does not deny coverage under any group health plans or particular benefits for non-participation or limit the extent of benefits for employees who choose not to participate
- Plan does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of Section 503 of ADA, codified at 42 U.S.C 12203
- Plan provides employees with notice that is written so that the employee from whom medical information is being obtained is reasonably likely to understand it, describes the type of medical information that will be obtained and the specific purposes for which the medical information will be used, and describes the restrictions on the disclosure of the employee’s medical information, the employer representatives or other parties with whom the information will be shared and the methods that the covered entity will use to ensure that medical information is not improperly disclosed
Aldrich Benefits LP can provide sample language and a model notice, as well as consult with you on your wellness plan design compliance.
Meet the Author
VP, Business Development
Aldrich Benefits LP
Evan Cole partners with his clients to advise and assist them with their employee benefit plans, specializing in group and association plans. Prior to joining Aldrich, Evan was a top producing employee benefits representative for one of the nation’s largest life, disability, and dental carriers. He holds licenses for life and health in the states... Read more Evan Cole
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