Wellness programs in the workplace are generally based on the belief that as employees lose weight, stop smoking, eat more healthfully, and lower their cholesterol, their employer will reap a drop in absenteeism and health care costs. With that hope in mind, employers are often willing to offer a financial reward to encourage employees’ participation.  The Equal Employment Opportunity Commission (“EEOC”) has long been concerned about whether the financial reward offered makes such wellness programs “involuntary” such that the wellness programs fail to comply with the Americans with Disabilities Act (“ADA”) and/or the Genetic Information Nondiscrimination Act (“GINA”).  Previous S&J blog posts have reported the EEOC’s actions with respect to wellness programs over the years, including the EEOC’s issuance of final ADA and GINA regulations addressing wellness programs.  Those regulations have been challenged in court by the AARP, and you can expect changes in the regulations as a result.  This post will bring you up to speed on the litigation and what you should watch for going forward. 

As discussed in our June 2016 post, the EEOC’s ADA regulations permit an employer wellness program that is open only to employees who are enrolled in a particular plan to offer a financial incentive, provided it did not exceed 30% of the total cost for self-only coverage of the plan in which the employee is enrolled. Likewise, the GINA regulations permit an employer to offer an incentive for an employee’s spouse to provide information about the spouse’s current or past health status as part of an employer wellness program, provided the incentive is limited to 30% of the total cost of self-only coverage under the group health plan in which the employee and family members are enrolled. These rules went into effect on the first day of the first plan year beginning on or after January 1, 2017.

In the fall of 2016, the AARP brought suit on behalf of its members, arguing that the ADA and GINA regulations are inconsistent with Congress’s statutory requirement that employers’ wellness programs be “voluntary.” The AARP argued its members were injured by being forced to pay higher health insurance costs to avoid disclosing personal health information.  In the fall of 2017, the U.S. District Court for the District of Columbia granted summary judgment to the AARP, holding that, although the term “voluntary” was ambiguous in the ADA’s and GINA’s statutes, the EEOC’s interpretation of the term was not supported by a reasoned explanation and therefore was not entitled to the Court’s deference. AARP v. EEOC, 267 F.Supp.3d 14 (D.D.C. 2017).  In its defense, the EEOC stated there were several reasons it adopted its 30% incentive limits.  First, the EEOC argued its incentive limits were consistent with other applicable law, specifically the HIPAA nondiscrimination regulations as modified by the Affordable Care Act.  Noting that HIPAA has a different statutory purpose, the Court stated that the EEOC had provided no support as to why HIPAA’s rules were therefore an appropriate yardstick to use.  Additionally, the Court found that HIPAA’s incentive limits are calculated differently, and its rules apply to a different subset of wellness programs.  Therefore, the Court found that “the EEOC has thus achieved, at best, only partial consistency with [other law] for only a minority of wellness programs.”  Moreover, the Court held that the EEOC had failed to consider any factors that were relevant to whether incentives could be applied without violating the ADA’s and GINA’s voluntariness requirements.  The Court therefore ordered the EEOC to reconsider the incentive limits in its ADA and GINA regulations.

The Court’s opinion is interesting in that the Court did not vacate the ADA and GINA regulations. It was concerned that doing so would be overly disruptive to employers and employees who had acted in reliance upon the regulations.  Instead, the Court remanded the rules to the EEOC and ordered the EEOC to provide a status report as to when the incentive limits rules would be reviewed and revised.

Subsequently, AARP requested that the Court reconsider its refusal to vacate the regulations. In the wake of the August 2017 order, the EEOC had stated it intended to issue proposed regulations in the second half of 2018 with a final rule in the fall of 2019, which would not likely be effective before 2021.  Noting that employers would have plenty of time to design their 2019 wellness plans based on a change in rules, the Court agreed to reconsider its order and vacated the portions of the ADA and GINA regulations pertaining to incentive limits for wellness programs, effective as of January 1, 2019. AARP v. EEOC, 2017 BL 455301 (D.D.C. Dec. 20, 2017).  Apparently wishing to keep the EEOC on the hot seat, the Court stated it would “hold the EEOC to its intended deadline of August 2018” for issuing proposed regulations, and “strongly encouraged” the EEOC to do so sooner if possible, so that the revised rules would apply earlier than 2021.

More recently, the Court once again reconsidered its judgment and vacated the portion of its order that required the EEOC to issue proposed regulations on the Court’s timeline. AARP v. EEOC, 1:16-cv-02113 (1/18/18).  Even so, the Court retained the requirement that the EEOC file a status report by March 30, 2018, stating its schedule for review of the incentive limits.

Employers would be wise to consider what changes may be appropriate in their wellness programs in light of the anticipated revision of the ADA and GINA rules regarding incentives.