By: Erin M. Hussey, Esq.

Back in 2016 the American Association of Retired Persons (“AARP”) sued the Equal Employment Opportunity Commission (“EEOC”) claiming that the EEOC’s wellness incentive rules that apply to wellness programs were coercive. Specifically, the AARP was referring to wellness programs that involve disability-related inquiries or medical examinations and those that ask plan participants to provide family medical history or genetic information.

As a result the major issue in the AARP v. EEOC case was whether an employer can sponsor that type of wellness program and apply an incentive or penalty of up to 30% of the cost of self-only coverage and still be considered a “voluntary” wellness program under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). The court found that the EEOC "failed to adequately explain" the 30% maximum and the EEOC has been directed to re-write their workplace wellness rules for an effective date of January 1, 2019.

The EEOC is supposed to issue proposed regulations on August 31, 2018. If the EEOC does not re-write new rules, then the old rules will be vacated instead of being replaced with new rules. Thus, there are two paths the regulators may take:

1. EEOC does not re-write the rules (and current rules are vacated) or

1. EEOC does re-write the rules and the new rules will apply. 

We won’t know which path to pursue, however, until August 31, 2018. In the meantime employers should review the following considerations:

• The current EEOC rules will continue to apply for 2018; therefore, plans that are compliant with current rules should not have any compliance issues to date.

• If the EEOC does not re-write the rules, the current rules will be vacated.  Thus, pursuant to the vacated rules, the 30% incentive or penalty of the cost of self-only coverage is vacated starting in January 1, 2019.

• If the EEOC does re-write the rules, new rules will apply. Thus, pursuant to the new rules, employers should review their current wellness program design for potential compliance concerns that could arise in case there are new rules issued. For example, is the program truly voluntary?

• If an employer believes their wellness program could pose compliance concerns with either vacated rules or new rules, then the employer should explore alternative options (and have the processes in place to be ready to make those potential changes because the timeframe to revise plans may be short).

• Employers should stay tuned for updates since the EEOC may propose rules to the public August 31, 2018. Once those proposed rules are issued (or not issued, meaning the old rules are vacated instead of being replaced), employers may begin the process of restructuring their incentives to comply. Again, employers do not need to comply with new or vacated rules until January 1, 2019.

*Note: This ruling does not affect wellness programs that provide incentives for programs that do not require the above-noted ADA and GINA protected information to be disclosed (i.e.,  programs for smoking-cessation, nutrition, weight-loss). The above-mentioned EEOC wellness rules are separate from the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) wellness rules and the above ruling has no effect on these rules.