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The Wellness Ruling, In Depth

Updated: Jan 14


The following is an excerpt from Surprising Supreme Court Decision May Disallow Most Wellness Incentives in last week’s Employee Benefit News.

Have you ever wondered how a wellness program can be defined as “voluntary” rather than mandatory if noncompliance penalties often reach into four figures, while the Affordable Care Act’s 2018 “mandate” carries a noncompliance penalty of only $695?

You aren’t alone. Late last month, a federal court ruled in AARP v. EEOC that the Equal Employment Opportunity Commission must rewrite its definition of “voluntary” to achieve consistency with the dictionary definition. Further, the EEOC must issue rules soon enough for employers to incorporate the new limits for incentives and penalties into their own wellness programs starting in January 2019. Yet as you’ll read below, there is a silver lining — and for some employers this could be the best thing ever to happen to their wellness program.

By way of background, a wellness program involving medical exams (screenings) or inquiries (many health risk assessments) must be voluntary in order to comply with the Americans with Disabilities Act and the Genetic Information Non-Discrimination Act. However, until this decision, “voluntary” was never defined. There had been almost no limitations, or even judicial or legislative guidance, on allowable penalties or incentives that can be tied to screenings or HRAs. The only bright line was the Affordable Care Act’s 30%-of-total-health-benefit-spending limitation (50% for smokers).

Even that limitation applied only to contingent (outcomes-based) wellness programs. Employers had far more discretion in participatory programs. For instance, a previous decision in favor of a company called Flambeau had held that employees could be required to complete a health risk assessment in order to obtain employer-sponsored health insurance.

Further, the 30% limitation was easily gamed by offering two different health plans whose monetary values could not be readily compared, and making the more attractive one available only to people who submitted to these programs.

What follows are the questions most often asked about AARP v. EEOC. Note that the decision was very recent. You are likely reading about this for the first time here, and probably 80% of your counterparts in other companies don’t even yet know that this has happened, or what its significance is...

Read the rest of the article and FAQ on EBN here.

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