Wellbeing Blog

February 6, 2018

AARP’s challenge to EEOC’s wellness program regulations

My team of wellbeing consultants has been getting a lot of questions about the AARP’s challenge to the EEOC’s wellness program regulations, specifically concerning the permissible incentive/penalty limit employers are allowed to offer for screenings or health risk assessments that ask medical questions. We wanted to recommend some practical next steps to assist you with communicating and planning for changes that may be needed. The following is not legal advice.

Employer wellness programs must be voluntary, among other requirements, but in its lawsuit against the EEOC, the AARP argued that offering an incentive/penalty of up to 30% is coercive and overly burdensome to low-income individuals and, therefore, involuntary. The courts were initially giving the EEOC until Aug. 31, 2018 to re-evaluate its position and propose revised rules for compliance under ADA and GINA. However, the courts have recently said that if the EEOC simply doesn’t respond by Jan. 1, 2019, the existing rules will be otherwise vacated at that time. Plausibly, the EEOC could respond before January and propose reducing the incentive/penalty limit from 30% to 20%, but if they do not respond and the rules are vacated, there are a few possible outcomes:

  • Employers would rely on less specific pre-2016 rules from the EEOC which said, that wellness programs must be “voluntary” and “could not require participation or penalize employees who do not participate.”

  • Employers would rely on case law and ADA safe harbor laws to design their wellness programs in a way that insulates wellness programs from the ADA voluntary requirement.

  • Cautious employers may reduce incentives/penalties tied to health risk assessments and screenings, offer alternative program options to those that collect medical information or shift to a wellness program model without incentives. Activity-based programs that do not include medical inquiries or exams are not impacted, although if it is part of a health plan, the HIPAA/ACA wellness rules would still apply.

We can’t predict the future, but we are staying abreast the developments so we can help employers modify their wellness programs as we get clarity. We are keeping an eye out for a status report from the EEOC. Until then, here are four practical steps you can take:

  1. Review the January Benefit Beat to learn more about the regulation and its timing. The February issue of the Benefit Beat will also include additional information. Employers should continue to follow current wellness regulations in the meantime.

  2. Confirm if your wellness program offers incentives/penalties for health risk assessments, screenings or other medical tests and information.

  3. Calculate the current incentives/penalties value, and if it’s currently valued at the upper limits of the permissible incentive, between 20 and 30%, create scenarios using a lower value.

  4. Review your program design with a benefits and wellbeing consultant who can help assess the reasonableness of your current program and evaluate your carrier/vendor’s capacity to support possible future design changes. A consultant may want to review the questions of your current health risk assessment, for example, because an HRA that does not ask medical questions is not impacted. The HRA can ask questions about lifestyle, such as how many servings of vegetables a person eats a day. 

Many employers are using incentives to drive participation numbers up in their wellness programs, but also recognize that incentives may only play a limited role in changing or sustaining health habits or outcomes. There isn’t a one-size-fits-all approach, so a wellbeing consultant can help to evaluate if and where incentives may fit into your overall strategy, as well as recommend ways to build employees’ intrinsic motivation to participate and make healthy behavior changes going forward. And if or when your employee wellness program or incentive design warrants a change, you can work with a subject matter expert to get guidance on best practices and communication with employees to minimize the potential negative impact on engagement. 

We invite you to join us for our webinar this summer: Culture is Key: How to Re-Energize Your Company with a Standout Wellbeing Program (Aug. 14).

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