January 16, 2018

As we reported in September 2017, a D.C. Federal District Court directed the Equal Employment Opportunity Commission (“EEOC”) to rewrite its workplace wellness rules.  At issue in the case brought by the AARP, is whether a wellness program can offer an incentive or surcharge of up to 30% of the cost of self-only coverage and still be considered “voluntary” under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). These EEOC wellness rules are separate from the wellness rules under the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) and the ruling has no effect on the HIPAA and ACA wellness rules.

The court found that the EEOC did not provide enough evidence in its regulatory analysis to show how the 30% rule is consistent with the ADA and GINA. Nor was the EEOC able to justify its decision based on comments it received in response to the proposed rules, as we discussed in our September article.

In response to the court’s order, the EEOC reported that it expected to issue proposed regulations in August 2018 and final EEOC wellness rules issued in October 2019 with an effective date in early 2021.  Presumably, this timeline was designed to give the EEOC time to review alternatives and solicit applicable comments from affected parties, as required by law.  However, the AARP criticized the EEOC’s 2021 target date for replacing the rules and requested the judge protect workers by eliminating the current rules. 

Agreeing that an EEOC “process that will not generate applicable rules until 2021 is unacceptable," the court granted the AARP's motion, but said it would not become effective until January 1, 2019.  Therefore, the rules governing incentives under the ADA and GINA will no longer apply starting January 1, 2019.  In the interim, the court said it would "hold EEOC to its intended deadline of August 2018 for the issuance of a notice of proposed rulemaking.”  To keep the EEOC on track, the judge ordered the EEOC to report back to the court on its schedule for rulemaking by March 30, 2018.

The EEOC will need to act quickly if it intends to change its workplace EEOC wellness rules.  The current rules will continue to apply for 2018, so employers do not need to make any changes to their 2018 wellness programs as a result of this ruling.  Hopefully, more information about possible rule changes will become available in March (when the EEOC reports to the court) or August (when the new proposed regulations are expected).  Employers may want to consider evaluating their wellness programs for 2019 in light of any new information, although it may come late in the year for some employers.  HUB International will continue to monitor these developments and provide updates as appropriate.

Please contact your HUB advisor to find out more about possible wellness initiatives for your company.  View more compliance articles in our Compliance Directory.

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The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.