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HOW WE SEE IT | INDUSTRY UPDATE

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2019 Regulation Changes for Wellness Incentives

If you’re an employer that focuses on employee well being by offering a wellness program, you’ve likely caught wind of recent regulation changes that will impact wellness incentives beginning 1/1/19. If this is news to you (or if you’d like an update), here’s the lowdown.

What happened?
In December 2017, the judge in the AARP v. EEOC case vacated the incentive limits established by the Equal Employment Opportunity Commission (EEOC) for certain employer wellness programs and ordered the agency to propose new rules by August 31. In March 2018, the EEOC stated that the agency has no plans to issue new wellness incentive regulations by a specified date, partly because they may wait for confirmation of the new commissioners nominated by President Trump before taking action, but that timing remains uncertain.

Why the change?
The EEOC wants employees to feel they have a choice in participating in employer-sponsored wellness programs, not coerced by large incentives. Two people could look at the same incentive for completing a health screening and one could feel it’s truly voluntary whereas the other, based on their financial circumstances, could feel like they have no choice but to participate, even if they don’t want to.

Is it bad if they leave the regulations unfinalized?
Yes. Most employers are finalizing their 2019 wellness strategies now, which means they’re left in limbo about the future of their wellness programs that are subject to the Americans with Disabilities Act (ADA) or Genetic Information Nondiscrimination Act (GINA) — and thus subject to the EEOC’s wellness regulations.

So what does all of this mean for my wellness program?
When the incentive portion of the EEOC wellness rules is vacated on January 1, 2019, wellness programs that link incentives to components considered “medical exams” (health screenings, annual physical with PCP, cotinine testing to determine tobacco use, meeting certain health criteria/outcomes, etc.), that ask employees disability-related inquiries (health risk assessments), and/or that ask spouses about family medical history (health risk assessments), will need to proceed cautiously. Here are some possible courses of action:

1. Maintain status quo until new EEOC wellness incentive rules are released. Some employers are choosing to continue to follow the EEOC’s limits on incentives with the assumption that the EEOC is unlikely to challenge an employer that complies with those limits (unless new rules are issued). However, employers should note employees can still bring a private lawsuit without the backing of the EEOC (like we saw in Seff v. Broward County).
2. Decrease the level of incentive you offer for “medical exams” or certain health risk assessments. Some employers are decreasing their incentive amounts to minimize their risk of employees being disgruntled for being asked to complete health screenings, health risk assessments, etc.
3. Offer incentives only for completing components that are not medical exams or health risk assessments. By removing an incentive tied to a medical exam or health risk assessment, you are decreasing your risk potential. Examples are tobacco surcharges without medical testing, verified gym use, challenge programs, wellness education/quizzes, etc.

Okay, what are my next steps?
Most importantly, if you require medical exams and/or health risk assessments to earn an incentive, include language on all your wellness communications that tells employees you are willing to work with them to determine an alternative option to earn the same incentive. You do not need to communicate upfront what alternate options are available, you just need to tell employees they have options and who they can contact for more information. Behind-the-scenes you need to determine the logistics of these alternatives in case an employee reaches out.

Regarding how you proceed with your wellness program strategy, consult your legal counsel, your wellness vendors/partners, and IMA to ensure you are compliant. IMA will continue to monitor any developments related to the EEOC’s rules and communicate those to clients.