Changes in Incentive Limits: Welcome to 2019 Corporate Wellness

Anytime I meet with a new client or even one of our existing clients who offer a wellness program, the question is: “What can we offer for incentives and still be compliant?”

As of January 1, 2019, there will no longer be a maximum incentive amount under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  Employers are now free to link any incentive amount to employee disclosure of health information.

Previously, according to the ADA law, employers were able to implement an incentive equal up to 30% of the total cost of self-only coverage in exchange for the employee participating in a “medical exam” (i.e., a biometric screen) or a disability-related inquiry (i.e., health risk assessment (HRA)). Under GINA, the incentive maximum is the same, but it applies to incentivizing an employee’s spouse to participate in those activities.

As of January 1, 2019, thanks to the AARP v. EEOC case, the 30% incentive maximum is going “bye-bye.”  This will leave no benchmark for employers to decide what incentive level they can tie to employee or spousal participation in HRAs or biometric screens.

A review of the court decision in the AARP v. EEOC case explains why it is risky to assume that an incentive of greater than 30% of the total cost of self-only coverage is permissible after January 1, 2019. The court ruled against the EEOC’s decision to permit incentives of up to 30% of the total cost of self-only coverage for several reasons.

Overall, with this decision, the 30% incentive is going away because the court agreed with the AARP in concluding that the 30% incentive maximum was likely too high to satisfy the ADA’s “voluntary” requirement. If and when the EEOC creates new incentive rules, it must do so by justifying whatever number it chooses as meeting the ADA’s voluntary requirement. Most likely, this number will be lower than the 30% maximum.  As a result, employers who decide to impose incentives of more than 30% of the total cost of self-only coverage are doing so in disregard to the court’s reasoning in AARP v. EEOC, unless of course the employer can show that whatever incentive it imposes meets the ADA and GINA “voluntary” requirements.

Clear as mud, right!  For additional questions on understanding how you want to implement, enhance and/or revamp your corporate wellness program, please contact Well365 at Happy New Year!

This article does NOT constitute legal advice and should not be used as such. It is for educational purposes only. Readers should retain legal counsel to obtain definitive answers.