The Definition of "Voluntary" Wellness Programs Is Changing—Here's How to Adapt

The verdict of a recent federal lawsuit is changing the definition of voluntary wellness programs, and your company's offering may have to evolve to comply with the new regulation.

At the end of 2018, a federal court ruled in AARP v. EEOC that the Equal Employment Opportunity Commission must rewrite its definition of "voluntary" wellness program to fall in line with the standard dictionary definition. The controversy began back in 2016, when the American Association for Retired Persons (AARP), filed a suit against the Equal Employment Opportunity Commission (EEOC), alleging that their existing regulations did not accurately reflect the definition of the word "voluntary," as defined by the the Americans with Disabilities Act (ADA) and the Genetic Information Non-Discrimination Act (GINA), because medical testing and inquiries were sometimes requirements for employer-sponsored wellness programs.

In addition, the AARP's allegation stated that the penalty imposed on employees who chose not to participate in their employer's wellness program could be so financially burdensome that the "voluntary-based wellness program," would not in fact be voluntary at all, but rather coercive.

After a long back-and-forth battle in court, the outcome was as follows: the EEOC must issue rules soon enough for employers to incorporate the new limits for incentives and penalties into their own wellness programs starting in January 2019. What does this mean for you? Essentially, there are three options to now consider when developing your wellness incentive plans, but you will be need to decide how risk adverse you want to be starting in 2019.

Avoid providing any kind of incentive attached to employee medical testing or disability-related inquiries, family health history questioners and biometric screenings from spouses.

Instead, move your incentive budget to non-clinical activities, such as attending a financial wellbeing workshop, participating in a walking challenge, completing a community-sponsored race or even volunteering personal time at a soup kitchen.

This approach complies with the new definition of strictly "voluntary" wellness programs, and doesn't push the envelope.

Reduce your current incentive budget to be well below the 30 percent threshold of the annual total cost of coverage—a reasonable cut of the total. And, make sure that the penalty for not participating is not financially burdensome for your employees. Once it becomes costly for your workers to not participate, the program could be deemed coercive, and therefore not truly voluntary.

This model falls more in the gray area of the new definition of "voluntary," but is still compliant.

Ignore the vacated ruling and proceed with the EEOC's current regulation, since they've already endured a long court battle against the changes, and have indicated that they will continue to fight them without enforcing the required modifications.

However, be mindful of potential lawsuits filed by your employees alleging that your wellness program is financially burdensome and therefore not voluntary. If this happens, you leave your fate to the courts.

Plus, keep this in mind: If wellness programs are intended to foster overall wellbeing and a healthy workplace culture, then incentive plans (if one even needs to exist at all) should be designed to encourage, acknowledge and reward behaviors, not create penalties so severe that they could influence financial instability. That simply defeats the entire purpose of a wellness program.

Photo: Creative Commons