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EEOC Withdraws Wellness Plan Incentive Rules

    Client Alerts
  • January 07, 2019

Employer wellness plans have attracted multiple legal challenges ranging from HIPAA concerns to allegations that such programs violate federal civil rights under GINA and the ADA. Adding to this confusion, the Equal Employment Opportunity Commission recently announced its intent to withdraw rules that attempted to provide employers with some clarity in terms of what can and cannot be offered under such plans.

The 2016 EEOC rules provided employers with a safe harbor for offering employees incentives to participate in wellness plans. Employers could provide up to 30 percent of the cost of single employee coverage in return for employee participation. AARP challenged these rules on the basis that the 30 percent threshold was arbitrary and not supported by any meaningful reasoning. A federal district court agreed, and the EEOC apparently decided not to pursue the case, preferring instead to withdraw the offending incentive plan limits.

Even if arbitrary, the 2016 rule provided employers with a clear benchmark against which to measure their wellness plan incentives. Absent this limit, employer wellness plans will be subject to individual challenge on the basis that they discriminate against persons unable or unwilling to participate (by depriving them of the incentives’ benefits). When combined with continuing differences in interpretation of incentive programs under HIPAA and the ADA, employers will face an uncertain legal environment when constructing their wellness programs.