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Back at Square One: The Questionable Status of Employer Wellness Plans
March 13, 2019
Sponsored wellness plans that include incentives to employees who voluntarily disclose personal health information as part of disability-related inquiries or medical examinations are in legal limbo after the EEOC removed the underlying rules from the Americans with Disabilities Act (“ADA”) and Genetic Information Nondiscrimination Act (“GINA”).

As background, the ADA and GINA are federal statutes that protect employees’ health information and prohibit discrimination in employment or benefits based upon that information. Specifically, the ADA and GINA require employer-sponsored wellness programs with inquiries or medical examinations regarding an employee’s (or the employee’s family) disability or medical history to be “voluntary.” However, there was little guidance on what constituted “voluntary.”

On May 17, 2016, the EEOC issued final rules that allowed an employee to “voluntarily” participate in an employee wellness program, including any disability-related inquiries or medical examinations that are part of such program, in exchange for financial incentives without conflicting with the ADA or GINA. To qualify under the EEOC rule, the incentive could not be a discount of more than 30 percent  of the cost of self-only health insurance coverage. Eager to minimize or strategically manage the steeply increasing cost of health care, employers implemented wellness programs using this incentive to gather employees’ health information.

Soon thereafter, AARP challenged the EEOC rules in the Circuit Court of the District of Columbia, alleging the final rules were not truly “voluntary,” as some employees could only afford to participate in the health insurance plan if they provided their medical information and received the 30 percent discount. The court agreed, and issued an injunction that invalidated the EEOC incentive rules as of January 1, 2019. The EEOC revoked the incentive rules and, while it intended to replace the rules before the end of 2018, it now projects a notice of proposed rulemaking in the summer of this year. This likely pushes back the original anticipated effective date of the new rules, which was 2021. As a result, the legal status of employer-sponsored wellness programs that include any disability-related inquiries or medical examinations in exchange for discounted benefits, is questionable.

With the ADA and GINA protections still in place, and the current vacuum of EEOC rules regarding wellness programs incentives, employers are strongly encouraged to consult with legal counsel to review the employer’s policies regarding such programs and any others pertaining to employees’ health information. Depending on the level of risk the employer is comfortable with, such programs and policies may require revision or suspension.

If you have any questions about this area of law, please contact us.

Labor & Employment Law Chelsea E. Thompson