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EEOC to Issue Proposed Wellness Rules to Replace Vacated Rules

After two years in limbo, the Equal Employment Opportunity Commission (EEOC) took steps on June 11, 2020, during its Public Meeting on Wellness Notice of Proposed Rulemaking, to vote on new proposed wellness rules that would replace the previously vacated rules.


Notable changes from the previous rules that are expected based on the hearing discussion include:


New Interpretation of Insurance Safe Harbor

The American’s with Disabilities Act (ADA) safe harbor allows plan administrators to establish, sponsor, observe or administer the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law. In its public hearing, the EEOC is newly interpreting this safe harbor to include certain wellness programs.

For any wellness program that is tied to a health insurance plan, the EEOC is maintaining the maximum incentive of 30% of the cost of the insurance coverage. This mirrors the limit that was set in the previously vacated rules to the extent that it is 30%. During the hearing, however, the agency did not discuss how it would calculate 30%. Whether it is 30% of the lowest cost employee-only plan like the vacated rules, 30% of the total cost like the ACA/HIPAA rules, or some other calculation, remains to be seen.

New De Minimis Incentive Limit

For any wellness program that is not tied to a health insurance plan, any incentives for participation must be “de minimis.” In its hearing, however, the agency did not offer a definition for what qualifies as “de minimis.” When looking to other agency guidance, we should anticipate that “de minimis” will be a relatively low dollar value. For example, with respect to fringe benefits, the Internal Revenue Service (IRS), defines de minimis as not exceeding $100.

New Privacy Protections

Under the new proposed rule, employers will be limited to receiving aggregated/de-identified medical information from the wellness program. Further, the new proposal would require an employer to ask third-party wellness vendors about their privacy and confidentiality practices. For employers who have wellness programs tied to their health insurance plan, this latter requirement could likely be satisfied by obtaining a business associate agreement (BAA), which is already required by HIPAA.

What Hasn’t Changed

The new rules discussed above are part of a proposed rulemaking, meaning they are not effective yet. The new proposals will continue through a formal rulemaking process, which includes a comment period for the general public. Accordingly, following the comment period and once finalized, the final rule may have different requirements, definitions, or interpretations than the initial proposed rules.

Additionally, it is important to note that existing wellness compliance obligations under HIPAA and the ACA remain in place unaffected by the new proposed rule. Similar to the EEOC’s wellness rules, HIPAA and the ACA’s requirements also institute incentive limits and wellness program participation requirements.

For additional insights on how to navigate evolving compliance requirements, contact your local OneDigital strategist.