January 16, 2018

Wellness Rule Review Fast Track (article)

Wellness programs are governed by many laws, two of which, the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), have been under the microscope recently. 

As background, the ADA and GINA require that any collection of medical information be voluntary unless the collection is used in conjunction with a bona fide medical plan and employees are neither required to participate nor penalized for non-participation. In 2016, the Equal Employment Opportunity Commission (EEOC) issued final regulations governing wellness programs; specifically, these rules address what constitutes the voluntary collection of medical information, and the use of financial incentives based on the collection of medical information.  According to these rules, the use of incentives, such as a reward or penalty, is permissible but cannot exceed 30% of the cost of coverage. 

The American Association of Retired Persons (AARP) challenged whether these EEOC standards comply with the spirit of the voluntary aspect of the ADA and GINA.  In August, 2017, Judge D. John Bates for the U.S. District Court for the District of Columbia determined that the EEOC had not adequately proven a basis for the up to 30% risk reward (see Wellness Rules Under Scrutiny, Benefit Beat, 9/11/17). He directed the EEOC to further consider its rules, specifically for validation of the 30% standard.  In the initial Court Order, Judge Bates did not vacate the rules as requested by the AARP; his position was that it would be too disruptive to employer plans and participants to vacate the rules at that time. 

Following the court decision, the EEOC indicated that it intended to issue a proposed rule addressing the voluntary standards by August, 2018, and final regulations in late 2019, with an anticipated effective date of the change to be sometime in 2021.

On December 20, 2017, Judge Bates modified the initial court order based on the painfully slow progress being made by the EEOC. Judge Bates determined that a year would be ample time for employers to make modifications to their plans.  Thus, according to his revised order, the current EEOC regulations allowing up to 30% risk or reward would be vacated on January 1, 2019.  In the meantime, he suggested the EEOC to issue proposed regulations by August 31, 2018, and requested a progress report toward that end by March 31, 2018.

This state of uncertainty places employers sponsoring wellness programs that collect medical information in a bit of a quandary.  Calendar-year plans should begin reviewing how they want to address their programs, based on the fact that this portion of the EEOC regulations will be vacated as of January 1, 2019.  Important to note, this Court decision impacts the ADA and GINA wellness regulations.  It does not impact the HIPAA-Affordable Care Act wellness rules except to the extent that a particular wellness program would be impacted by both sets of regulations.  What this means is that an HIPAA-ACA wellness program that does not involve the collection of medical information or physical exam is not impacted by this Court decision.  By way of example, activity-based wellness programs such as one that requires walking a certain amount each week, or a health risk assessment that asks how much broccoli or quinoa you eat each week, can continue uninterrupted.  Of course, reasonable alternatives must be made available, in accordance with the HIPAA-ACA rules in appropriate circumstances.

As part of our 2018 CBIZ B&I webinar series, we will be hosting a webinar on June 19th to discuss compliance issues surrounding wellness programs.  Hopefully, by that time, additional guidance and clarifications will be available.  To sign up for our June 19th webinar, please visit our webinar webpage on CBIZ.com.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. 

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