A federal court has ordered the Equal Employment Opportunity Commission to go back to the drawing board and revamp its wellness regulations that the commission adopted last year.
However, the Washington, DC Circuit Court did not vacate the rules, but ordered the EEOC to more closely follow the law federal governing how government agencies can and cannot make rules.
The court specifically told the EEOC to reconsider restrictions on the how an employer can offer employees incentives to participate in a wellness program without violating the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA).
The court said the EEOC failed to adequately explain why it determined that an incentive or penalty of up to 30% of the cost of self-only coverage (the lowest price coverage an employer can legally provide) should be the maximum incentive or penalty that would be considered “voluntary” under ADA and GINA.
The court pointed out that this portion of the wellness rules violated both Obamacare regulations and the Health Insurance Portability and Accountability Act (HIPAA).
It also noted that the EEOC cited only a single Kaiser Family Foundation study stating that current insurance rates support the 30% mark, and relied too heavily on comments from the American Heart Association and ignored other commenters.
The court argued that the EEOC did not respond to “substantial criticism” of its choice of the 30% threshold and did not consider its financial and economic impact, such as the impact on specific premium levels, personal income and other factors.
Russell Chapman, an attorney with the law firm of Littler Mendelson, recommends that because the court did not vacate the rules, employers with incentive-based wellness programs should continue to comply with the EEOC’s ADA and GINA wellness regulations, in addition to the HIPAA and ACA wellness rules.