On December 20, 2017, The U.S. District Court for the District of Columbia granted a motion from the AARP to alter or amend the judgment, and to vacate the challenged “voluntary” incentives allowed in certain wellness programs subject to the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) rules of Equal Employment Opportunity Commission’s (EEOC’s) final rule on employer wellness programs.

The EEOC’s final rule allowed employers to offer wellness incentives of up to 30% of the cost of individual coverage. The rule took effect January 1, 2017 and many employers implemented or updated wellness programs based on the new guidance. A suit filed by the AARP contended the high penalty (30% higher cost for health coverage) for an employee who chooses not to participate, rendered an employee’s disclosure of ADA and GINA protected information involuntary.  On August 22, 2017 the court found that the EEOC failed to adequately explain its decision to construe the term “voluntary” in the ADA and GINA to permit the 30% incentive level adopted in both the ADA rule and the GINA rule.

The EEOC later announced that in light of the court’s decision, it would propose a new rule with an expected implementation time frame of 2021. In the December ruling, the court stated, “an agency process that will not generate applicable rules until 2021 is unacceptable”.  However, the court exercised its discretion to stay the effective date of its vacatur order until January 1, 2019.

In the ruling, the court strongly encouraged the EEOC to move up its deadline for issuing the notice of proposed rulemaking, and to engage in any other measures necessary to ensure that its new rules can be applied well before the current estimate of sometime in 2021.

For 2018, the EEOC’s final wellness rules remain in place.  However, beginning Jan. 1, 2019, the final rules’ guidance on permissible incentive limits for voluntary wellness programs will no longer apply.

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