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September 20, 2017
New developments have arisen in the wellness area recently. One recent court case challenges the validity of the final regulations, and another alleges that Macy’s failed to comply with the final rules. The final rules establish how a wellness program should be structured to avoid violating nondiscrimination rules under HIPAA, the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA). There are no big changes here—at least not yet. Our general advice is to stay the course with your wellness programs and monitor the developments. None of the recent news requires immediate changes, but the court decisions discussed in more detail below could lead to changes in the future.
Exceptions to the nondiscrimination rules set forth under HIPAA, the ADA, and GINA allow wellness programs to provide incentives (or impose penalties) based on factors such as health status or medical testing, so long as certain requirements are met.
Under HIPAA nondiscrimination rules, a wellness program that affects the group health plan (e.g., reductions in medical premiums or cost-sharing) must meet the following requirements:
Separately, to avoid violating ADA or GINA rules, a wellness program that requires medical testing or disability-related questions (or asks about the current or past health status of the spouse) must comply with the following requirements set forth by the EEOC:
Strange Adversaries – EEOC and AARP
The headline “AARP sues EEOC” takes a little time to digest. That’s because the American Association of Retired Persons (AARP) and the EEOC usually take the same position in litigation against alleged age discrimination. This case, however, was about the AARP’s opposition to final wellness rules issued by the EEOC that allow an incentive of up to 30% of the employee-only cost of coverage.
The statute generally says that employers can offer “voluntary” wellness programs. The gist of the AARP’s claim is that such large incentives make these programs involuntary. In a judicial opinion that’s best left for legal scholars to parse, the court essentially told the EEOC to go back to the drawing board and consider comments they received during the rule-making process. Notably, the court did not rule that the regulations are invalid. The decision itself may be found at https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv2113-47.
Again, for reasons best left to the lawyers, this matter could see more life—perhaps in the form of a new set of rules issued by the EEOC that involve adjusting maximum incentive limits or an appeal to a higher court. Predictions beyond this are really just guesswork.
Department of Labor and Macy’s
In a related development, the Department of Labor (DOL) has sued Macy’s, alleging that their tobacco cessation program violated wellness rules. (The DOL action against Macy’s involves other allegations that the health plan had changed their out-of-network reimbursement approach without disclosing the changes.) We can only speculate, but this has the feel of a routine health plan audit that ended up in a bad place.
Regarding the tobacco cessation program, the lawsuit alleges violations of wellness rules requiring a “reasonable alternative” for avoiding the tobacco surcharge and a notice for the same (Acosta v. Macy’s Inc., S.D. Ohio, No. 1:17-cv-00541). It appears that Macy’s had a plan that simply violated the HIPAA wellness rules. This litigation is just beginning, and it will be instructive to see how it ends.
Advice for Plan Sponsors
We have two recent developments in the wellness area. The court’s decision in the AARP v. EEOC litigation suggests that the EEOC final rules that apply when wellness programs use medical testing or disability-related questions may see more revisions, especially those rules related to incentive limits. But the court took careful steps to ensure that the regulations remain in place pending further review.
In the DOL’s litigation against Macy’s, we see the DOL enforcing what seem to be the pretty clear terms of the HIPAA wellness regulations. The DOL has routinely been including wellness questions in its health plan audits, and this litigation suggests that they will take action against wellness plans that are not in compliance.
Most healthcare experts agree that wellness plans are here to stay. Employers that have wellness plans in place now, or for 2018, should continue to comply with both the HIPAA and the EEOC final regulations while watching closely for more developments.
As always, should you have any questions, please contact your Parker, Smith & Feek Benefits Team
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.