Court Gavel

By Katherine Kelton, general counsel and corporate secretary, StayWell

The EEOC is again extending its timeline to issue regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Non-Discrimination Act (GINA) that would clarify financial incentives under a voluntary workplace wellness program. New rules are now expected to be published in December 2019.

In the meantime, the delay continues to create uncertainty for companies that have incorporated financial incentives, such as health plan premium reductions, into wellness programs. Some may need to restructure incentive design, if financial rewards or penalties are significant within a program that requests genetic or medical information.

The evolution of EEOC rules

The ADA and GINA protect employees’ health and genetic information from being used or disclosed in a way that could be discriminatory, including at work or for insurance coverage. At question in AARP v. EEOC were portions of the EEOC's workplace well-being regulations that let employers collect such information as long as it was provided by participants in a voluntary program. Those regulations allowed employers to offer financial incentives to encourage program participation in an amount up to 30% of the cost of self-only health care coverage.

In its lawsuit, AARP argued that these incentives penalized employees who refuse to disclose medical and genetic information through wellness programs at work, and therefore, wellness programs offering financial incentives cannot be considered “voluntary” given the financial burden this additional cost of coverage could place on individuals who declined to participate.

The courts determined that the EEOC’s definition of “voluntary” needed clarification but left it to the agency to go back to the drawing board. The AARP, not satisfied with the EEOC’s initial proposed timetable for new regulations, pressed the courts to take more definitive action. In a December 20, 2017 ruling, the court agreed, ordering the wellness program incentive regulations would be vacated effective January 1, 2019. The EEOC responded by deleting the definition in its entirety.

What’s next?

It’s still not clear whether the EEOC will revise the definition of “voluntary well-being program” under the ADA and GINA. While employers wait to see what rules will govern incentive design in the next program year, they can still turn to the statutes for guidance on how to structure financial incentives.

What has become clear since the initial ruling:

  • “Voluntary wellness programs” are currently not defined using a dollar amount of financial incentives
  • The GINA definition of “voluntary wellness program” remains intact
  • ACA/ADA/HIPAA requirements for “nondiscriminatory” wellness programs remain intact
  • Financial incentives tied to disclosure of genetic information carry some risk

It’s important to keep in mind that wellness programs that rely on non-financial incentives such as contests and challenges supported by nominal rewards, non-monetary recognition, or charitable contributions based on individual or group performance can proceed as planned. These types of incentives were not invalidated by this ruling, and there is no indication that such rewards are under agency scrutiny.

Taking initiative

While the EEOC carves out regulations, employers should carefully monitor the situation and begin considering alternatives for 2020 and beyond as we wait for further guidance. Be sure to review your specific program structure and understand the laws that apply to it. We also encourage you to discuss the impact of this ruling on your wellness program with your legal counsel.

For additional information on EEOC regulations and tips on incentive program compliance, download our white paper or watch our recent webinar: The Art and Science of Incentive Design.