CAUTION NECESSARY FOR WELLNESS PROGRAMS DUE TO RECENT DEVELOPMENTS

Many employers are successfully using wellness programs and finding that good programs can be a"win-win."  That is, employee wellness improves attendance and reduces healthcare plan costs, while showing the employer's desire to help workers.  Unfortunately, there are many legal issues in setting up and operating a wellness plan.  While the Affordable Care Act (ACA) encourages wellness programs, such plans must be "voluntary" to be legal under both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). 

The Equal Employment Opportunity Commission (EEOC) had issued regulations supporting the use of company-sponsored wellness programs, including provisions allowing employers to offer a 30% reduction in individual health premiums for employees participating in voluntary wellness programs.  The American Association of Retired Persons (AARP) filed a lawsuit against the EEOC regulations, contending that incentives up to 30% of the cost of an employee's health insurance premiums show that employee participation would not really be "voluntary."  A federal judge last year ordered the EEOC to make some corrections to the regulations or the rules would have to be vacated by January 1 of this year.  The EEOC did not make revisions, and instead removed the contested sections from its regulations in December.

Thus, at this time there is no "safe harbor" as to the incentives employers can offer to encourage voluntary participation in wellness programs.  At the same time, a number of lawsuits have been brought by the Department of Labor (DOL) against employers' welfare programs.  Suits have been brought by the DOL against Macy's and subsidiaries of Cigna and Anthem over Macy's tobacco cessation program, and against Dorel Juvenile Group over its surcharge for participants who use tobacco products.    Most recently, ChemStation was sued over its requirement to pay higher healthplan premiums for those who do not participate in its wellness program or fail to maintain certain health outcomes.  Among other things, the lawsuit against ChemStation contends that the wellness plan did not offer any alternative standard by which participants could obtain the discounted premiums.

The bottom line is that wellness programs are subject to strict legal requirements.  Although the EEOC says it plans to issue a new set of wellness regulations by mid-2019, this entire area is legally controversial and needs clarification.