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EEOC's New Proposed Rules Impact Incentives for Wellness Programs and COVID-19 Vaccinations

    Client Alerts
  • January 14, 2021

On January 7, the U.S. Equal Employment Opportunity Commission (EEOC) sent to the Federal Register for publication new notices of proposed rulemakings on wellness programs with respect to the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). Specifically, the new proposed rules focus on the level of incentives that can be offered by sponsoring employers in an effort to increase participation in wellness programs for which medical information has to be disclosed.

Previous rules issued by the EEOC relied on the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act, to allow incentives up to 30% of the total cost of employee-only health insurance coverage. However, these rules were vacated by the U.S. District Court for the District of Columbia in 2017. The decision was based on the fact that under the ADA and GINA, employee participation in wellness programs that require disclosure of medical information must be “voluntary.” The court concluded that if incentives to participate in such wellness programs are sizable, individuals would be unduly pressured by employers to disclose their medical data. In such circumstances, participation could not be seen as “voluntary.”

As a result, the EEOC now is issuing new proposed rules explicitly stating that wellness programs for which medical information has to be disclosed may only offer “de minimis” incentives to encourage employee participation. The EEOC specified that a water bottle or a gift card of modest value would meet that requirement.

However, health-contingent wellness programs that constitute group health plans would not be subject to this new de minimis requirement. In other words, group health plans can offer the maximum allowed incentive under the HIPAA regulations, if HIPAA requirements for such plans otherwise are met.

One issue concerning this new proposed rule that deserves attention is the potential impact on employer COVID-19 vaccination policies. On December 16, the EEOC issued updated guidance explaining that while a vaccination program is not itself a medical examination under the ADA, most vaccination programs include pre-screening questions that implicate the ADA. Therefore, employers could run afoul of the ADA if they provide greater than de minimis incentives to encourage vaccination (such as a cash bonus) and also administer the vaccination program themselves. 

To avoid this new rule, employers should consider having their employees get vaccinated by a third party who is not under contract with the employer. In that scenario, any pre-screening questions would not be attributable to the employer and the program would therefore not implicate the ADA. In any event, employers who choose to adopt a voluntary vaccination policy should carefully consider the type and value of incentives they offer as well as the method of administering the vaccine.