Final EEOC Wellness Program Rules Inconsistent with ACA

May 20, 2016

This week, the Equal Employment Opportunity Commission published its final wellness program rules, raising employer concerns that its subjective and undefined requirements may actually increase litigation.  The final rules under the Americans with Disabilities Act and Genetic Information Nondiscrimination Act are relatively unchanged from what the EEOC proposed.  However, they do include two new confidentiality requirements to protect employee privacy.  Additional items of note include:

  • The final rules limit financial incentives to 30% of self-only coverage, which effectively limits the incentives employers can offer to employees enrolled in family coverage.

  • The rule also prohibits employers from offering "gated" health plans that require employee participation in a wellness program in order to enroll in a plan, and limits financial incentives for wellness programs that biometrically screen for nicotine use to 30% (ACA allows up to 50%).

  • Two new requirements are added to the ACA's "reasonability" standard that will likely be litigated.  Under the final rule, a wellness programs is "not reasonably designed to promote health or prevent disease" if itrequires "unreasonably intrusive procedures," or "if it exists mainly to shift costs from the covered entity to targeted employees based on their health."

  • The financial incentive provisions of the final rules apply prospectively to wellness programs as of the first day of the first plan year that begins on or after January 1, 2017.  However, other parts of the rules, such as those requiring confidentiality, are effective on July 18, 2016.
Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) said he will push for passage of the Preserving Employee Wellness Programs Act (S. 620) to ensure consistency with the ACA regulations, and he also may introduce resolutions of disapproval under the Congressional Review Act to overturn the EEOC rules.  President Obama, however, seems unlikely to sign either S. 620 or the CRA resolution.