Wellness Incentives Under Scrutiny After District Court Decision

In the most recent updates to the AARP v. EEOC wellness case (AARP v. EEOC, D.D.C., No. 1:16-cv-02113), the District Court for the District of Columbia has ordered the Equal Employment Opportunity Commission (“EEOC”) to review the wellness regulations related to the Genetic Information Nondiscrimination Act (“GINA”) and the Americans with Disabilities Act (“ADA”) with respect to the amount of incentives that an employer may provide under a wellness program.

The ADA and GINA both permit the collection of certain health information by an employer so long as the disclosure is “voluntary.” However, neither the ADA nor GINA provides a definition of what is considered “voluntary.”  In May of 2016, the ADA and GINA wellness regulations were finalized and provide, in relevant part, that a wellness program can offer incentives or penalties of up to 30% of the cost of self-only coverage.

AARP filed suit on behalf of its members, alleging that such an incentive rendered wellness programs “involuntary.” AARP argued that employees who wanted to keep certain medical information private would be unfairly coerced into disclosing the information when faced with an increase in their monthly premium payments of up to 30%.  In December of 2016, the Court denied AARP’s motion for a preliminary injunction to halt applicability of the wellness regulations, which took effect January 1, 2017.

However, on August 22, 2017, the District Court granted summary judgment to AARP. The Court found that there was no clear basis for the EEOC’s assertion that the 30% incentive limit was consistent with the “voluntary” requirements of ADA and GINA.  It noted that the EEOC did not consider any relevant factors in determining that a 30% cap on incentives meant that such programs were voluntary.  The Court accordingly ordered the EEOC to reexamine its decision on the incentive level permitted under the ADA and GINA, without vacating the rules entirely.

Most recently, on August 30, 2017, AARP filed a motion to block the EEOC regulations for wellness programs starting in 2018. The motion requests that the Court either (1) vacate the rules, effective for 2018 or (2) issue an injunction, barring enforcement of the existing ADA and GINA wellness regulations, effective January 1, 2018.  The EEOC has until September 11, 2017 to respond to this motion.

As employers put the finishing touches on their wellness programs for 2018, they may want to be mindful of the incentive amounts, considering that changes may be forthcoming.