We recently heard that a lawsuit against an employer involving wellness program incentives under the Americans with Disabilities Act (ADA) was allowed to proceed forward. It is our understanding that the incentive portion of the ADA’s wellness program rules issued by the Equal Employment Opportunity Commission (EEOC) were vacated, pending additional guidance. What is the latest update on the ADA requirements for employers that sponsor a wellness program?
The lawsuit at issue does involve the wellness requirements under the ADA, but at this point, it has a long way to go before we will know if this court (or another court) will impose an incentive limit that would allow a wellness program subject to the ADA to be considered “voluntary” or whether as a result of this lawsuit, the EEOC will issue guidance with respect to incentives that may be permitted under a wellness program subject to the ADA.
The EEOC first issued wellness regulations in 2016 that provided guidance on the circumstances under which wellness programs are considered “voluntary” for purposes of the ADA; however, a federal court invalidated the provision of that rule that defined the incentives that could be offered (or penalties that could be imposed).
In response, the EEOC announced new proposed regulations in early 2021 that would significantly change the incentives permitted under the ADA, but the proposed regulations were withdrawn pursuant to a regulatory freeze at the beginning of the Biden administration. To date, the EEOC has not issued any further guidance on this topic.
As a reminder, the ADA would apply only to the portion of wellness programs that include “medical examinations” (e.g., biometric screenings) and/or “disability-related inquiries” (e.g., health risk assessments). Wellness programs that do not include disability-related inquiries or medical examinations would not be subject to the ADA.
Without clarifying guidance from the EEOC, it is unclear how much of an incentive can be offered and still allow the program to be considered voluntary for ADA purposes.
A federal judge in Illinois recently refused to dismiss a class action lawsuit brought under the ADA based on a “voluntary” wellness program. According to the lawsuit, if a participant completed the company’s wellness program, then he or she obtained a financial discount on their health insurance plan premiums. Non-participants in the wellness program, including the plaintiffs in the lawsuit, were not eligible for the discount, which would have saved one of the plaintiffs, who had family coverage, more than $1,800 a year ($34.81 per week).
The plaintiffs argue that premium reduction may be enough to “incentivize” health plan enrollees to participate in the wellness program and to submit to biometric and health screenings when they might prefer not to — in other words, making participation in the wellness program “involuntary,” which would violate the ADA.
The employer wellness program sponsor in this case moved to have the lawsuit dismissed, arguing that the wellness program was not “penalizing” employees for non-participation but only “incentivizing” participation. Therefore, the employer argued, the program was voluntary, and the lawsuit had no merit (and should be dismissed). The judge ruled that the lawsuit could proceed based on what the plaintiffs had alleged because whether the wellness program was voluntary is a question of fact. The court did not rule on the merits of the lawsuit nor set a standard for what is “voluntary” at this time.
An eventual decision on the merits of this lawsuit could change what is allowed as an incentive for wellness programs to remain “voluntary” under the ADA in this specific jurisdiction. It would also allow for other similar legal challenges in other jurisdictions.
Unfortunately, without EEOC guidance, currently there is no set standard for determining what is voluntary. We continue to wait to see if the EEOC will issue any guidance.
While not the focus of the lawsuit discussed above, wellness plan sponsor liability under the Genetic Information Nondiscrimination Act (GINA) is also a possibility. The GINA rules address the extent to which an employer may offer an incentive to an employee to provide information about the health of the employee’s spouse as part of a health risk assessment or medical examination administered as part of a wellness program.
In 2022, a federal judge in Illinois refused to dismiss all GINA claims in a lawsuit against the city of Chicago based on similar allegations. In that case, the city required non-participating employees to pay a monthly penalty of $50. If their covered spouses also declined to participate, the employees had to pay a monthly penalty of $100. Under GINA, information about a spouse's health is considered the employee’s “genetic information.” The GINA claims of employees with individual coverage were dismissed because no “genetic information” was sought. But the GINA claims of the employees whose spouses were covered by the employer’s group health plan were allowed to proceed. That case remains unresolved.
Note: Employers sponsoring wellness plans should ensure that the plans continue to comply with the Health Insurance Portability and Accountability Act (HIPAA) wellness rules. [1]
