Wellness Programs

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****UPDATE:  These proposed regulations were not published in the Federal Register before President Biden’s inauguration.  In accordance with the Memorandum for the Heads of Executive Departments and Agencies, issued by Chief of Staff Ronald A. Klain, the proposed regulations have been withdrawn for review by the Biden administration.****

On January 7th,…

The U.S. District Court for the District of Columbia (Judge Bates) has denied AARP’s request to block the implementation of the EEOC’s final wellness regulations pending a decision on the merits. As we have discussed previously, the regulations address the extent to which an employer may offer incentives to participate in a wellness program without violating the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA).  The final rules have taken effect as of January 1, 2017.

As we have previously discussed in detail in several blogs (New EEOC Regulations Provide Roadmap for Wellness Programs; EEOC Issues Final Rules On Employer-Sponsored Wellness Program Compliance Under the ADA and GINA; and District Court Decision Upholds Employer’s Wellness Program But Signals Support for EEOC Positions Going Forward), the EEOC issued…

In EEOC v. Orion Energy Systems, Inc.,  the Eastern District of Wisconsin rejected the EEOC’s claims that Orion Energy’s wellness program violated the Americans with Disabilities Act (“ADA”).  Although the court upheld the employer’s past practice, the court signaled that the EEOC’s recent regulations on wellness plans (discussed here and here), which limit the incentive that an employer can provide to encourage participation in a wellness program, will be enforceable going forward.  Although it has limited precedential value, the Orion decision suggests that employers should continue to take the new regulations into account for 2017 and beyond.

For the past couple of years, the U.S. Equal Employment Opportunity Commission (EEOC) has been challenging employer wellness programs for their alleged violations of the Americans with Disabilities Act (ADA).  The most recent EEOC challenge was in EEOC v. Flambeau, Inc., (No. 14-cv-638-bbc (December 31, 2015)).  In this case, the U.S. District Court for the Western District of Wisconsin handed the EEOC another loss in a wellness case (and handed employers a big win) by holding that the ADA “safe harbor” provision for bona fide benefit plans allowed the Wisconsin plastics manufacturer to condition participation in its self-funded group health plan on a requirement that employees complete a health risk assessment (HRA) and undergo “biometric screening.”

As we previously reported here, the Equal Employment Opportunity Commission (EEOC) released Proposed Rules on April 16, 2015 to provide guidance under the Americans with Disabilities Act (ADA) on permissible employer incentives for employee participation in wellness programs.  Comments on the proposed rules were due on or before June 19, 2015.  The EEOC received…

On April 16, 2015, the Equal Employment Opportunity Commission (EEOC) released proposed regulations covering wellness programs that involve disability-related inquiries or medical examinations.  The release of the proposed regulations follows months of EEOC enforcement actions against employers alleging that wellness programs sponsored by the employers violated the Americans with Disabilities Act (ADA) despite compliance with 2013 regulations jointly issued by the Department of Labor (DOL), the Department of the Treasury (Treasury) and the Department of Health and Human Services (HHS) that permitted such programs under ERISA and the Affordable Care Act (ACA).  With a few notable exceptions (described below), the proposed regulations are somewhat consistent with the existing DOL guidance on employer-sponsored wellness programs.  However, the EEOC has requested comments on multiple topics that could significantly alter the regulatory requirements.

As previously reported, the federal agencies responsible for drafting the rules implementing the Affordable Care Act (ACA) (the U.S. Labor Department, the U.S. Department of Health and Human Services and the U.S. Treasury Department (together, the “Departments”)) on January 9, 2014 issued FAQ Part XVIII, regarding implementation of the market reform provisions of the ACA.

These FAQs are part of the government’s efforts to provide so-called “subregulatory guidance” – that is, guidance providing relatively quick helpful answers to respond to issues and trends affecting group health plans and insurers. FAQ Part XVIII includes guidance for employers sponsoring wellness programs that contain tobacco cessation components, and on the “reasonable alternatives” required to be made available under health-contingent wellness programs.

On May 29, 2013, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued final regulations on implementing and expanding employment-based wellness programs. The rules set forth in the final regulations remain largely unchanged from the proposed rules issued on November 20, 2012. For example, as provided for in the proposed rules, the final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20 percent to 30 percent of the cost of coverage. The final regulations also increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use. http://www.proskauer.com/publications/client-alert/new-guidance-on-wellness-programs-issued/.  However, a few points and clarifications are particularly noteworthy: