Wellness Incentives Are Not Dead Yet:  Potential Outcomes from the AARP v. EEOC Order

NOTE: The opinions in this article are the author’s and do not necessarily represent the views of Shortlister

On December 20, 2017, the district court in the AARP v. EEOC case ordered the EEOC to go back to rewrite its wellness incentive rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  Those rules, released in May 2016, allow employers to impose incentives of up to 30% of the total cost of self-only coverage to encourage employees to participate in health risk assessments, and spouses to participate in biometric screens and health risk assessments. 

The AARP sued the EEOC about those incentive rules because the AARP believed that many employees, especially those with low incomes and disabilities, would find an incentive of 30% of the total cost of coverage to be “involuntary.”  The ADA generally forbids employers from inquiring into an employee’s health except in very limited circumstances.  One circumstance in which an employer can inquire about an employee’s health is through a “voluntary” wellness program.  Wellness program inquiries into an employee’s health usually take the form of health risk assessments or biometric screens.  The AARP’s position is that a 30% incentive to participate in a health risk assessment would violate the ADA’s “voluntary” requirement.  So, the AARP asked the court to force the EEOC to rescind its incentive rules under the ADA and GINA.  The court obliged and has asked the EEOC to propose new rules later in 2018.  It also vacated the current rules as of January 1, 2019. gavel-4-1236439-1.jpg

In the wake of the December 20, 2017 court order, there have been numerous articles and comments rejoicing the demise of the incentive rules under the ADA and GINA.  What these commentators may fail to realize, however, is that what might happen next is a scrapping of the entire wellness incentive rule under the ADA and GINA.  The EEOC may decide that it can’t pick an incentive limit number that all employees would consider “voluntary” when being asked to divulge their personal health information.  As a result, we may go back to the EEOC Enforcement Guidance days when all the guidance we had from the EEOC about the meaning of “voluntary” was that incentives could not “require participation nor penalize employees who do not participate.”  For many of those who work in workplace wellness, that guidance was not very helpful.

It is certainly possible that many employers may choose to forgo incentives when offering health risk assessments or biometric screens.  Employers may believe that the uncertain legal landscape of incentives are not worth the headache.  But I have heard too many professionals attest that incentives work for their organization.  As a result, incentives may not disappear entirely.

With that prospect in mind, what could happen in the world of workplace wellness incentives for “participatory” programs, such as incentivizing employees to take a health risk assessment?  (“Participatory” wellness programs are those programs that do not condition the obtaining of a wellness reward on the participant’s health status.  See 

pillars-1483018.jpgOne real possibility is that without the ADA incentive limit rules, employers may feel free to raise participatory program incentives to 100% of the employee’s premium cost, as was the case in the EEOC v. Flambeau and EEOC v. Orion Energy cases.  In particular, the court in the Flambeau case adopted the reasoning in Seff v. Broward County that the ADA safe harbor applied to the employer’s wellness program, effectively insulating the program from the ADA’s voluntary requirement.  Recall that the ADA safe harbor permits employers who have wellness programs tied to their health insurance plan to conduct medical examinations of employees to administer and underwrite insurance risks associated with an employer’s health plan.  42 USC § 12201(c)(2)

The EEOC’s wellness incentive rules under the ADA eliminated the safe harbor’s applicability to workplace wellness programs by claiming that under no circumstances, regardless of whether the wellness program was offered as part of an employer’s health plan, did the ADA safe harbor apply.  The EEOC’s wellness incentive rules also clarified that the 30% incentive limit applied to both participatory and health contingent wellness programs; under the HIPAA wellness incentive rules, incentive limits do not apply to participatory programs.

Thus, without the EEOC wellness incentive limit rules, employers with wellness programs embedded within their health plan may rely on the ADA safe harbor when establishing incentives.  It is possible that the EEOC will keep the provision eliminating the applicability of the safe harbor, while scrapping the incentive limit provisions.  But without any further guidance from the EEOC, employer groups may challenge the elimination of the safe harbor.  They may argue that if they embed their wellness program into their group health plan, and use it for helping administer the group health plan, then the ADA safe harbor should apply to those wellness programs.

It remains to be seen what the EEOC will propose with regard to its wellness incentive rules, and how the workplace wellness community will respond.  But, I think it is premature to declare that workplace wellness incentives are dead.


Article by Barbara J. Zabawa, JD, MPH

Center for Health and Wellness Law, LLC