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Did a Federal Court ‘Squash’ Using Carrots in Wellness Programs?

Did a Federal Court ‘Squash’ Using Carrots in Wellness Programs?
Posted on Tuesday, January 9, 2018 by Bruce Gillis
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Late last month, while most of us were focused on picking out holiday gifts and picking apart the new tax law, a federal court ruled that effective Jan. 1, 2019, employer-sponsored wellness programs must be truly voluntary. wellness image



This means that unless the government can write new rules before then, employers may no longer offer employees incentives (or threaten penalties) for wellness program participation involving medical exams or inquiries. The case, AARP v. EEOC, could change workplace wellness as we know it.

As HR/benefits pros well know, the current rules – developed under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) – allow insurers and health plans to offer employees and/or dependents incentives to participate in workplace wellness programs; the value of those incentives can equate up to 30% of the cost of self-coverage. 

However, in October 2016, AARP sued EEOC (Equal Employment Opportunity Commission), arguing that the rules allow employers to unlawfully coerce employees to disclose personal information through the use of financial incentives or penalties. The case was argued in federal court in Washington, D.C., with AARP pushing for the incentive rules to be vacated (legalese for thrown out) effective Jan. 1, 2018.

On Dec. 20, 2017, a D.C. federal judge agreed the rules should be vacated, but kept them in place through this year to avoid “nationwide disruption” to plans and “confusion” to employers and employees. In the ruling, the judge held EEOC to its self-imposed deadline to create new incentive rules by August 2018, but also that the current rules would be vacated Jan. 1, 2019.

In the meantime, now what? Can employers use carrots in wellness programs or not?

The answer is yes – for now. The new year is an ideal time to capitalize on employees’ fresh resolutions to stay fit, get healthy, and lose weight. Offering carrots such as cash, perks, and rewards is a long-used (and effective!) way to raise employee awareness and engagement, and to boost participation. Whatever strategies employers are using now for wellness program incentives doesn’t have to change … yet.

However, to avoid pulling up rotten carrots come 2019, employers may consider keeping an eye on:

  • Dig into legal alternatives for wellness incentives, and consider “planting” them with employees in during 2018, in the event rules indeed are vacated for 2019.
  • Be transparent with employees as the case progresses toward 2019 and how your wellness program may change. Open communication will be key in maintaining participation levels, even if incentive structures shift.
  • Check in with benefits providers/partners and legal counsel throughout the year to take the pulse of the case, and make contingency plans for 2019 as needed.

Learn more about what happened in AARP vs. EEOC, and what happens next in our webinar, “AARP vs. EEOC: 4 Things You Need to Know.”


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Bruce Gillis Head of Compliance Lorem ipsum dolor sit amet. View All Posts