The Policy

In August 2017, the United States District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to adopt 30 percent incentive levels for employer-sponsored wellness programs. Subsequently, the Court decided to vacate, or void, the EEOC’s wellness rule effective Jan. 1, 2019, instructing the agency that its goal of revising the rule by August 2019, to be effective in 2021, is too slow.

Our Take

As of October 2018, the EEOC intends to propose updates to the wellness regulations by June 2019. With the nullification of its regulation looming, the EEOC could either reissue the same regulations but provide more appropriate justification for why a 30% incentive is reasonable and voluntary, allow the regulations to remain vacated, or do something else — like issue completely new regulations.

Our Recommendations

Employers should continue to be compliant with the existing regulatory environment and take into account these considerations:

  • Wellness programs must be voluntary – regardless of any regulatory guidance, it’s the right way to build programs with measurable and enduring gains. Compliance with ADA and GINA has been and still is important.
  • Comply with HIPAA/ACA wellness regulations and consider using incentives conservatively staying within the 30% recommendations outlined by HIPAA/ACA until the EEOC makes any new guidelines.
  • Generally, employees must be offered choices for earning financial incentives. This includes the opportunity to pursue a reasonable alternative if the individual can establish with their personal physician or an allied health professional that the choices offered by the program are not reasonable for the employee due to a health condition.
  • As always, consult your legal counsel when developing any incentive strategy.
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