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Proposed Wellness Rules Released

The Equal Employment Opportunity Commission (EEOC) has re-proposed regulations addressing incentive limits that can be offered for participation in a wellness program under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act of 2008 (GINA). These new proposed rules address what level of incentives employers may lawfully offer to encourage employee participation in wellness programs that require disclosure of medical information, without violating the ADA or GINA. Employers and plan sponsors have been anxiously waiting three years for the issuance of these new proposed regulations. In the interim, many employers and plan sponsors have been very concerned with wellness plan compliance.

Background The proposed regulations respond to a decision by the U.S. District Court for the District of Columbia that vacated a portion of the EEOC’s previous ADA and GINA regulations a few years back. The Court’s decision, coupled with the EEOC’s failure to promptly issue new rules after that Court decision, has resulted in three years of uncertainty for employers as to the amount of incentive they can offer their employees and their spouses for their voluntary participation in a wellness program without violating federal law.

Employers who sponsor a wellness program are regulated by several different federal laws (i.e., the Health Insurance Portability and Accountability Act (HIPAA), ADA and GINA), each of which has a different purpose. Although HIPAA allows employers to offer incentives up to 30% of the total cost of health insurance to encourage participation in certain types of wellness programs, the ADA requires that employee participation in a wellness program that includes medical questions and exams be “voluntary.” Because the ADA and GINA do not define “voluntary,” the regulations propose that, in order to comply with the ADA and GINA, employers may offer no more than a de minimis incentive to encourage participation in wellness programs, with the exception of certain “health-contingent” wellness programs that would be permitted to offer the maximum allowed incentive under HIPAA.

Impact If finalized as proposed, the ADA proposed rule would significantly limit the level of incentives in many types of wellness programs, and the GINA proposed rule would prohibit employers from offering any incentives above a de minimis amount for family member participation in a wellness program when the family member provides their own medical information.

Next Steps It is important to note that employers are not required to comply with these proposed rules until after they are made final, however, it should be noted that the proposed rules do reflect the current interpretation of the EEOC with respect to these laws and indicate the criteria the EEOC would consider in deciding whether to bring a lawsuit against an employer with respect to its wellness program.

Additional changes are expected from the EEOC in response to comments received from stakeholders (during the 60 day comment period following the issuance of the rules), and changes are also expected under the incoming Biden administration that could impact the final approach.

Conner Strong & Buckelew will continue to monitor further developments on these rules and we will provide ongoing alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

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