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Court Vacates EEOC's Wellness Program Incentives Rules Effective January 1, 2019

In an opinion dated December 20, 2017, in American Association for Retired Persons (AARP) v. EEOC , the federal court in the District of Columbia vacated, effective January 1, 2019, the portions of the final regulations that the EEOC issued last year under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) addressing wellness program incentives.  The current regulations will remain effective for 2018 while the EEOC reconsiders and promulgates new rules.

In a previous opinion the court found that the EEOC had provided inadequate justification for its decision to allow plans and insurers to offer incentives of up to 30% of the cost of self-coverage in exchange for an employees’ participation in an employer-sponsored wellness program. The AARP argued that the 30% premium differential essentially negated the voluntary nature of the wellness program. The EEOC responded to this decision by setting a timeframe whereby they proposed to take until August 2018 to reconsider two regulations surrounding employer-sponsored wellness programs, issue a new final rule by October 2019, with substantive changes to the regulations not likely taking effect until January 2021.

The court found this timeline to be unacceptable, stating “If left to its own devices, … EEOC will not have a new rule ready to take effect for over three years—not what the Court envisioned when it assumed that the Commission could address its errors ‘in a timely manner.’” Accordingly, the court found ““there is plenty of time for employers to develop their 2019 wellness plans with knowledge that the Rules have been vacated.”

For 2018, employers may continue to rely on the EEOC’s final regulations. For 2019 and beyond, employers are again faced with uncertainty as to their wellness program incentives.  Employers designing and maintaining wellness programs should continue to monitor developments, including the issuance of any new wellness program regulations.