On Dec. 20, 2017, a D.C. federal judge held that the Equal Employment Opportunity Commission (EEOC)’s workplace wellness program rules – which permit employers to incentivize employees who participate in workplace wellness programs—will be vacated on Jan. 1, 2019. The judge held that the EEOC failed to provide a reasoned explanation for the rules, which he believed violated the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) without a reason for permitting an exception to the normal rules prohibiting disability-related inquiries, medical examinations and requesting genetic information. The judge further ordered the EEOC to promulgate any new proposed rules by Aug. 31, 2018 and to file a status report on the agency’s schedule for rulemaking by March 30, 2018.
By way of background, in May 2016, the EEOC finalized rules outlining how employers could offer incentives for wellness plans without violating the ADA or GINA. The rules allowed employers to offer incentives to employees in exchange for their voluntary answers to disability-related questions or medical examinations as part of a wellness program. Similar incentives could be offered to employees’ spouses for voluntarily providing information about their current or past health status. Under the rules, a wellness program that asked such questions or included medical examinations could offer incentives of up to thirty percent of the total cost of the “self-only” coverage of the plan in which the employee was enrolled. Similarly, the maximum incentive for an employee’s spouse to provide information about his or her health status would have been thirty percent of the total cost of self-only coverage.
Employers have time to develop new wellness plans and modify their health care plans accordingly because the rules are not vacated until 2019. The judge reasoned that vacating the rules prior to 2019 would wreak havoc on employer-provided healthcare plans because employers must know the regulatory incentive structure for the following year by June or July of the current year, at the latest, in order to have time to design their wellness plans. The Judge stayed his ruling (vacating the wellness program rules) because he did not think that employers would be able to modify their wellness plans “on the fly” or that employees would be able to handle a shift in their healthcare plans on such short notice.
Employers who have wellness plans are advised to begin the process early of re-designing or designing their 2019 plan prior to their open enrollment periods. Employers will want to pay careful attention to the status of new proposed rules from the EEOC. But unlike 2018 plans, for which “the egg has been scrambled,” there is still plenty of time for employers to develop their 2019 wellness plans with knowledge that the wellness rules have been vacated.