In December, the Equal Employment Opportunity Commission (“EEOC”) rescinded a portion of its employer wellness plan regulations that permitted financial incentives for employees to meet health related wellness goals. In 2017, a court in Washington, D.C., held that the wellness regulation was not properly adopted within EEOC’s regulation-making authority. The court did not hold that the regulation was necessarily illegal, only that it had been adopted without “sufficient reasoning” to justify it. It was expected by the court and the employer community that the EEOC would reconsider and re-issue the rule in some form, but that has not occurred.
In the absence of the regulation and any proposal to replace the regulation, it is arguable that any financial incentive that is more than de minimis and is contingent on the results of an individual physical exam or biometric testing is coercive and therefore violates the Americans With Disabilities Act (“ADA”) and the Genetic Information Non-Discrimination Act (“GINA”).
In light of the continuing debate over the Affordable Care Act and healthcare in general, employers should no longer expect new EEOC guidance any time soon. Therefore, employers that maintain such wellness programs should review and, perhaps, redesign them immediately. The immediate risk is that a court will hold that employees who do not meet the criteria for the award or refuse to be tested are, nevertheless, entitled to the award.
The goal of a wellness program is to make employees healthier and therefore reduce employer and employee health care costs. The goal of a health-contingent award, based on individual data and testing, is to incentivize demonstrably healthy employees with healthy lifestyles to stay the course, and demonstrably at-risk employees to adopt healthier lifestyles and thereby become healthier.
Under the regulations prior to December, an employer could have a health-contingent wellness program that includes financial awards for employees of up to 30 percent of the value of single coverage under the employer’s medical plan if the employee meets a health related goal. Examples of health related goals include reducing cholesterol, losing weight or stopping smoking. For example, an employer could pay money to an employee for reducing his or her cholesterol to a certain level or maintaining it at that level. In order to earn the award, the employee would have to show a reduction of cholesterol levels through a blood test. However, under ADA and GINA, employers may not require employees to have a physical exam or request information about disabilities or medical histories. The EEOC’s position was that the physical exam or biometric testing necessary to earn a wellness award is “voluntary” - not required - because 30 percent of the value of single coverage is not high enough to coerce employees to be part of the program.