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June 19, 2020 | News, Compliance, Corporate Wellness & Benefits

EEOC Drafts New Wellness Incentive Rule For Review

On Thursday, June 11th, the Equal Employment Opportunity Commission (EEOC) held a remote meeting to consider new proposed rules on the level of incentives employers may lawfully offer within wellness plans to encourage employee participation.

The focus was primarily on wellness programs that require disclosure of medical information, and how employers can incent such programs without violating the Americans with Disabilities Act (ADA). 

Since the announcement, there have been several posts and headlines shared that have misrepresented the EEOC’s new proposed rule. As with anything in the news, it’s essential to get facts straight from the source. Here's what we know from the public meeting last week.

The Commission voted 2-1 to approve a proposed ruling that employers can tie up to 30% of the total cost of health plan premium to wellness incentives if the employee is on the employer's health plan.

During the public hearing, EEOC attorney Joyce Walker-Jones summarized the draft plan, stating that the “subset of wellness programs that are part of employer health plans” would allow employers to raise or lower workers' insurance contributions by up to 30% to get employees to take part in the wellness program.

This is in response to the 2017 decision of the U.S. District Court for the District of Columbia. In that decision, the Court found that the EEOC failed to adequately explain what “voluntary” means in both the ADA and the Genetic Information Nondiscrimination Act (GINA) guidelines for permitting incentives within “voluntary” wellness programs. The EEOC had stated that use of 30% of the cost of health insurance premiums for wellness incentives met the standard of “voluntary”, and the court disagreed. As a result, the court decided to vacate the safe harbor for incentives tied to disclosure of medical information as a part of the ADA.

For wellness plans that include employees who are NOT on the employer-sponsored health plan, the new rules limit incentives to “no more than de minimis incentives".

In this portion of the new rule, the EEOC agrees that large incentive levels seem to violate the spirit of the “voluntary” requirement within ADA. If a wellness program is not connected to an employer's health plan and it includes "disability-related inquiries and/or medical examinations," than anything over a de minimis incentive would be deemed coercive and not voluntary.

Notice, the EEOC is clearly defining which types of programs are limited to de minimis incentives and which can use up to 30% of the cost of health insurance. It is simply not true that all wellness programs are limited to just de minimis rewards. 

Guidance for Employers

Bravo and our partners are in the process of determining the exact meaning behind the language used in the new proposed ruling, but we are encouraged by our initial reading of the new rule. It reflects our own opinion that providing health plans with the means of driving down preventable health risks by leveraging a percentage of the employer’s health insurance premium subsidy is 100% in-line with the spirit of the HIPAA wellness rules, the Affordable Care Act and the ADA safe harbor.

As a company, our public stance has been that incentives offered outside of an employer’s health plan (no matter how well-intentioned) do not provide for the same protections under the existing regulations. We are happy to see the EEOC bring clarification to that point.

The next step of the EEOC’s process is to submit the new rule to the Office of Management and Budget for review. If approved, the rule will be published, and the public will have an opportunity to submit comments. 

Until that time, it is our recommendation that employers continue to offer wellness programs that give employees alternate paths to achieving the full incentive that DO NOT require a health inquiry. This provides for a reasonable plan design under the existing legal landscape. We advise employers to resist making any plan changes in light of the new rule until it is approved. 

Topics: News, Compliance, Corporate Wellness & Benefits

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