Why it matters

The AARP filed suit against the Equal Employment Opportunity Commission (EEOC) in D.C. federal court, requesting an injunction to halt the implementation of the EEOC’s new wellness program regulations. AARP—which represents 38 million people over the age of 50—argued that the regulations violate anti-discrimination provisions in both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) by forcing nonparticipating employees to effectively pay a “penalty” in the form of higher insurance premiums than those who elect to share their disability and genetic information with employers. The EEOC regulations, set to take effect in 2017, generally provide that employer wellness programs are voluntary if health coverage is not conditioned on participation and if a penalty for nonparticipation is no more than 30% of an employee’s health insurance premium. But the 30% rule permits a penalty so substantial as to make an employee’s participation involuntary, at an average cost of $1,800 to $5,200 per year, according to the AARP’s complaint.

Detailed discussion

In May, the Equal Employment Opportunity Commission (EEOC) published a pair of final rules, one for the Americans with Disabilities Act (ADA) and a second for the Genetic Information Nondiscrimination Act (GINA), intended to provide greater certainty to employers regarding how those laws apply to workplace wellness programs consistent with the Health Insurance Portability and Accountability Act (HIPAA).

Pursuant to the rules, an employer-sponsored wellness program is permissible if it is “reasonably designed to promote health or prevent disease” and employee participation is “voluntary,” meaning employers do not require any employees to participate, do not deny workers who elect not to participate access to health coverage or prohibit the choice of certain plans, and do not “take any other adverse action or retaliation against, interfere with, coerce, intimidate or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.”

The final ADA rule established that wellness programs that are part of a group health plan, and ask questions about employees’ health or include medical examinations, may offer incentives of up to 30% of the total cost of self-only coverage (including the employee’s and employer’s contribution). Similarly, the final GINA rule provides that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30% of the total cost of self-only coverage.

AARP argued in its federal court complaint, however, that the 30% incentive actually serves as a penalty to those employees who elect not to share their information. “The EEOC’s 2016 wellness rules enable employers to pressure employees to divulge their own confidential health information and the confidential genetic information of their spouses as part of an employee ‘wellness’ program,” the group argued. “Yet, the ADA and GINA expressly protect employees’ medical privacy from such coercion.”

In enacting the ADA and GINA, Congress expressed concern about the potential for facilitating employment discrimination and giving rise to stigma surrounding disabilities and genetic information, AARP alleged, and for 15 years, the EEOC maintained that employee wellness programs implicating confidential medical information were voluntary only if employers neither required participation nor penalized employees who chose to keep their information private.

“The 2016 Rules depart starkly from the EEOC’s longstanding position,” AARP argued. “Under the 2016 Rules, employers may penalize employees who do not disclose private health and genetic information through wellness programs. Employers’ ‘inducements’ may be monetary or non-monetary, and they may be framed as rewards for participation or punishments for declining to participate.”

AARP noted that the new EEOC rules hit its members particularly hard, as “a disproportionate number of older workers have one or more actual ‘disabilities,’ a record thereof, and/or are perceived as having a disability, and are therefore protected by the ADA. Older workers are also more likely to have the very types of ‘invisible’ disabilities—such as mental health conditions—that are likely to be revealed by medical questionnaires.” And once revealed, the divulged medical information “will never be confidential again,” ARRP added.

On average, the 30% figure amounts to $1,800 per year for employee-only coverage or $5,200 for family coverage, AARP stated. Not participating in an employee wellness program “would double or even triple those employees’ individual health insurance costs,” the complaint alleged, resulting in a harsh penalty that is not based on any economic analysis, legal requirements or facts in the record. Given this significant financial impact, participation in an employee wellness program cannot fairly be described as “voluntary,” AARP asserted.

The suit seeks a declaratory judgment and permanent injunctive relief halting implementation of the EEOC’s rules, which the group characterized as “arbitrary, capricious, an abuse of discretion, and contrary to law.”

To read the complaint in AARP v. EEOC, click here.