In a recent high-profile court ruling, a judge didn’t flat-out strike down controversial EEOC regs regarding employer wellness plans, but his ruling does have the potential to alter the fate of those regs.
The high-profile suit in question is AARP v. EEOC, a case that centered around the legality of the EEOC’s recent wellness regs. Specifically, the case hinged around the notion of a “voluntary” wellness program.
Under the EEOC regs, employers can offer incentives of up to 30% of the total cost of coverage for self-only coverage for participation in company-sponsored wellness programs that include components like health-risk assessments (HRAs) and biometric screenings.
The AARP argued that such an incentive ran counter to the “voluntary” requirements of the ADA and GINA because employees who can’t afford to pay a 30% increase in premiums would essentially be forced to give up protected information that they wouldn’t have chosen to disclose otherwise.
In other words, the way the EEOC’s current regs are structured essentially amount to coercion and, according to the AARP suit, could put workers at risk of being discriminated against.
What the court said
U.S District Court for the District of Columbia Judge John D. Bates sided with AARP and agreed the EEOC hadn’t explained the reasoning behind wellness compliance rules with respect to both the ADA and GINA.
In a memorandum, Judge Bates said allowing employers and insurers to offer a 30% incentive for wellness program participation wasn’t “sufficiently remedied” by the fact that these programs were supposed to be completely voluntary.
Bates expanded on this stance by stating that there was nothing “that explains the [EEOC’s] conclusion that the 30% incentive level is the appropriate measure for voluntariness,” and that such an incentive “is actually not consistent with HIPAA.”
He went on to add that “the ‘voluntary’ provision of the ADA to permit incentives of up to 30% is thus deeply flawed.”
Then, Judge Bates, went on to specifically spell out the problem he found with the EEOC’s incentive percentage (for both ADA and GINA purposes) by stating:
“Having chosen to define “voluntary” in financial terms—30% of the cost of self-only coverage—the agency does not appear to have considered any factors relevant to the financial and economic impact the rule is likely to have on individuals who will be affected by the rule. For example, commenters pointed out that, based on the average annual cost of premiums in 2014, a 30% penalty for refusing to provide protected information would double the cost of health insurance for most employees. At around $1800 a year, this is the equivalent of several months’ worth of food for the average family, two months of child care in most states, and roughly two months’ rent.”
‘Disruptive consequences’
Despite pointing out so many problems with the EEOC’s regs, Bates decided not to “immediately vacate” (i.e., kill) the current regs, claiming such a move would wind up causing “significant disruptive consequences.” The Judge added that, if the regs were suddenly struck down, “employers who adopted incentives would be faced with the possibility that their current health plan are illegal; at best, employers would once again be left in limbo as to what is permitted and what is not with regard to incentives.”
Therefore, the court ordered the agency to reconsider the current regs. Now employers will have to wait to see what the EEOC does next.
The irony of the situation, however, is that by trying to avoid leaving employers in limbo, the court in many ways has done just that. The court seems to want the EEOC to revise its current guidelines and until that happens, employers will simply be left waiting anxiously for word from the agency.
What’s more, if the regs are changed, it’ll mean employers will have to pivot away from regs they’ve only just gotten used to and comply with a whole new standard.
