EEOC Issues Final Wellness Plan Rules

The Equal Employment Opportunity Commission issued final regulations on Wednesday that place limits on financial incentives used in certain employer-sponsored wellness programs. The two rules issued under the ADA and GINA, essentially limit such incentives or penalties to 30 percent of the cost of employee-only group medical coverage. Wellness programs that require employee or spouse medical examinations, or disclosure of family medical history, cannot include financial terms that reward or punish employees beyond this level based on their participation decision.

An example of a covered wellness program would be a discount on group medical insurance premiums offered to employees who agree to undergo biometric screening, and to receive information/counseling from the plan based on the results of such screening. The ADA limits employers’ ability to conduct employee medical examinations, and GINA rules previously prohibited the disclosure of family medical history, both of which are standard wellness program elements.

In addition to the financial limits, the new rules place vague restrictions on the terms of the wellness programs themselves. The plan must be reasonably designed to promote health or prevent disease, and cannot be overly burdensome, time consuming or intrusive. The EEOC gave little guidance for employers on these points. Employers can only access aggregate information in most cases and the rules require that employees receive a new notice about how information gathered under the wellness program will be used. The financial incentive limits and other requirements would also apply to any employer wellness program conducted outside of the group medical plan.

Most troubling for employers, the EEOC rules are inconsistent with those issued by other federal agencies under HIPAA and the ACA. Those laws allow greater financial incentives in some circumstances, such as a 50 percent discount for employees who participate in tobacco cessation programs. The EEOC rules essentially overrule the more generous incentives allowed under these other laws, because an employer following those guidelines would be subject to ADA or GINA claims.

The new regulations take effect on the first day of the employer’s group plan year occurring after January 1, 2017. Employers with wellness programs that conflict with the rules will need to amend those plans prior to their next plan year.

Jonathan Crotty

Jonathan Crotty

Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge. Mr. Crotty provides guidance to employers as they navigate the complex array of laws and regulations applicable to the employment relationship, including employment discrimination laws, OSHA compliance, FMLA, and wage and hour matters. If employers face legal or administrative claims resulting from their employees and employment practices, he defends and resolves those disputes in line with the client’s goals and expectations.

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