We previously blogged about the EEOC’s final rules, published in the Federal Register on May 17, 2016, that explain how the Americans with Disabilities Act (“ADA”) applies to employer sponsored wellness programs. These rules clarified when an employee health program, which includes a disability-related inquiry or medical examination, is considered “voluntary” under the ADA. The EEOC’s rules stated, amongst other things, that an employer may offer incentives for employees who participate in a wellness program as long as the incentive does not exceed 30% of the total cost of self-only coverage.
We also previously blogged that this incentive provision was under scrutiny by the U.S. District Court for the District of Columbia in the AARP v. EEOC wellness case, and subsequent to our blog post the Court ordered that it be vacated effective January 1, 2019. This means that although employers are not necessarily prohibited from implementing an incentive up to the 30% threshold, as of January 1, 2019 they cannot rely on the EEOC’s rules to demonstrate that their financial incentive is voluntary. In other words, there is uncertainty regarding when a financial incentive will be considered voluntary under the ADA.
As a result, employers may want to reevaluate the financial incentives under their wellness programs for the 2019 plan year. Some potential approaches that employers may wish to consider include:
- Eliminating all financial incentives for wellness programs that are subject to the ADA;
- Setting financial incentives for wellness programs that are subject to the ADA well below the 30% threshold;
- Redesigning wellness programs so that participants can obtain part, or the entire financial incentive, by participating in other activities that are not subject to the ADA (i.e., activities that are not disability-related inquiries or medical examinations); or
- Continuing to rely on the ADA 30% threshold, although vacated, unless and until the EEOC issues a new rule or a court finds the 30% threshold is not voluntary.
Although some employers may be inclined to move away from the 30% threshold when the incentive provision under the EEOC’s rules is vacated, other employers are taking a wait-and-see approach before making changes to their wellness incentives.