The shrinking incentive: wellness plans under review

By Lillian Hartgrove, State Board of Education Chairman
Special to the UCBJ

On Jan. 7, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) issued two new proposed regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Non-discrimination Act (GINA) with respect to wellness programs. On Jan. 20, 2021, the Biden administration issued an Executive Order (EO) asking administrative agencies to review any pending (non-final) regulations and as a result of the EO, and as of the publication of this Newsletter, the proposed regulations have not yet been published in the Federal Register so that the 60-day comment has not yet started. 

However, the proposed regulations should still be of interest to employers with wellness plans because they may be the bellwether of things to come. 

As readers will recall, the EEOC previously issued final rules under the ADA and GINA with respect to wellness programs in May 2016, but in 2017, in the case of AARP v. EEOC, the District Court for the District of Columbia determined that the rules were arbitrary and capricious and vacated the rules. AARP v. EEOC, 267 F. Supp. 3d 14 (D. D. C. 2017). In response to the AARP decision, the EEOC issued revised rules in 2018 removing the incentive language from the ADA and GINA regulations. 

The January 2021 proposed regulations circle back to address the level of incentive employers may offer in order to incentivize employee participation. Employers with wellness programs have utilized a variety of incentives in order to encourage employees to participate in those programs. However, the ADA and GINA place limits on an employer’s ability to require medical exams or make inquiries of an employee’s disability, personal genetic information or family medical history. Both the ADA and GINA allow employers to conduct medical examinations and examinations as part of wellness programs as long as the employees’ participation is considered “voluntary.”  The controversy arises when an inducement to participate (either through a reward or the risk of a penalty) in a wellness program is substantial enough that it is no longer considered “voluntary.”  

Wellness programs are generally divided into two categories: (1) participatory programs that do not require the satisfaction of a particular health goal but that may require activities such as completion of a health-risk assessment with no requirement to improve the results; and (2) health-contingent programs that provide rewards for completion of a particular health-based activity or based on satisfying some goal related to a health factor. The proposed regulations do not apply to programs that do not include disability-related questions or medical examinations, such as programs that provide only general health information.   

Under the proposed regulations, most wellness programs would be limited to no more than “de minimis incentives” to employees, such as a water bottle or gift card of modest value (i.e., $10-15).  For example, incentives of significant value, such as an employer-paid gym membership, would not be considered “de minimis.” 

Wellness plans may be, but are not required to be, part of a group health plan (GHP) and the proposed regulations noted one exception to the general rule, which is for a health contingent wellness program that provides an incentive as part of or that qualifies as a GHP. Under those circumstances, the employer could offer the maximum allowed under the 2013 HIPAA regulations but must meet all of the requirements for such programs under HIPAA.  

Given the uncertain status of the proposed regulations, there is no action for employers to take at this time. However, the “de minimis” standard announced in these regulations for incentives should cause employers to consider how such a standard would impact their existing wellness programs. It is anticipated that the EEOC will provide updates on the status of the proposed regulations in the near future.      

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