Corporate wellness insights

Federal Court Strikes Down EEOC Wellness Rules

Posted by Matthew on 01.19.2018

Congress federal lawEver since the Affordable Care Act became law in 2010, federal regulators have struggled to create rules to govern wellness incentives, program design, and consent requirements. Eight years later, it’s still a work in progress. Just a few weeks ago, in fact, a federal district court made a decision that could affect many wellness programs.

But first, some history.

Back in 2014, the Equal Employment Opportunity Commission (EEOC) sued employers whose wellness programs offered incentives (or penalties, depending on your perspective) that exceeded the legal limit. In 2016, the agency issued its own rules, which took effect on January 1, 2017.

AARP, a group that lobbies on behalf of older Americans, filed suit. They argued that the incentives allowed by EEOC—up to 30 percent of health coverage—were so high that they became coercive. With penalties that stiff, wellness programs were no longer truly “voluntary,” as required by law.

Fast-forward to 2017.

Last summer, a federal district court found that EEOC had failed to justify its rules sufficiently. It ordered them to do so, but didn’t invalidate the rules altogether. (Some wondered at the time why it didn’t.)

AARP then asked the court to reconsider. They argued that keeping the existing rules in place could cause harm—and in December, the court agreed. Its final decision allows EEOC’s rules to stand through the rest of 2018, but on January 1, 2019, they will become invalid.

What does this mean for you?

We don’t anticipate any major changes in the short term. The EEOC’s rules are still in place, and most of our clients won’t start planning for 2019 until the fall. But over the coming months, we’ll be watching carefully to see how the EEOC responds. If they release interim or revised rules—or if the courts throw us another curveball—we’ll provide an update.

In the meantime, our partner Shortlister posted a great article on the legal possibilities moving forward. It’s definitely worth checking out.

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