Is EEOC Wellness Guidance Coming Out of the Deep Freeze?

The Equal Employment Opportunity Commission (EEOC) has significantly delayed the issuance of guidance on the ability of employers to offer certain incentives for employees to participate in wellness programs. These delays are attributable to the current composition of the EEOC, which consists of three Republicans and two Democrats, who have been unable to publish a regulatory agenda for the agency in the fall of 2020 or the spring of 2021. As of July 1, 2022, these delays may come to a halt when one of the five seats, held by Republican Janet Dhillon, becomes open for President Biden to fill. 

The Regulations Withdrawn by EEOC in 2021 and 2016

EEOC proposed regulations in January 2021 concerning voluntary de minimis incentives for participatory wellness programs. The Americans with Disabilities Act (ADA) requires “voluntariness” whenever an employer performs a medical exam or makes a disability-related inquiry. Examples of these exams or inquiries concerning a wellness program are biometric testing and health risk assessments, which are widely used tools in such programs. 

Biden requested that the EEOC withdraw the 2021 wellness regulations as part of a regulatory freeze, pending review, when he took office. The 2021 withdrawal followed the withdrawal of the 2016 EEOC’s final wellness regulations, which capped incentives for wellness programs at 30% of the cost of self-only coverage for programs that fell under the ADA. As a result, if Biden’s nominee for the EEOC position survives the confirmation process, the EEOC could revive the proposed regulations containing the de minimis incentive rule, either in whole or in part. 

HIPAA Rules and the Absence of Withdrawn EEOC Regulations 

In the absence of a de minimis incentive rule, the current rules on wellness incentives come from the HIPAA regulations as follows:

  • Participatory wellness programs, which require no physical activity or health outcomes, would have no limit on incentives; and
  • Health-contingent wellness programs, which require physical activity or health outcomes, would have a maximum incentive equal to:
    • 30% of the individual premium under the most affordable group health plan option; or
    • 50% of the individual premium under the most affordable group health plan option if the program is designed to reduce or stop tobacco use.

HIPAA regulations also have other requirements for wellness programs, including design parameters, notification duties, and other criteria. 

Potential Revival of the De Minimis Incentive Rule

Revival of the de minimis incentive rule would significantly impact employers’ wellness plans. Unlike the unlimited incentives available under HIPAA for participatory wellness plans, the de minimis rule would limit incentives to low-cost items like water bottles and modest value gift cards of $10 to $15. Some of these items, such as gift cards, may be taxable compensation, but others may be excludible as de minimis fringe benefits under the Internal Revenue Code.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.
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