Did the AARP Just Shoot Itself in the Foot? Back to the Wild West in Wellness Program Incentives

Posted by Barbara J. Zabawa | Jan 05, 2018 | 1 Comment

As I wrote in a recent blog post, the district court in the AARP v. EEOC case ordered the EEOC on December 20, 2017, to go back to the drawing board with regard to its wellness incentive rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  Recall that those rules, released in May 2016, allow employers to impose incentives of up to 30% of the total cost of self-only coverage to encourage employees to participate in health risk assessments, and spouses to participate in biometric screens and health risk assessments.  

In the wake of this court order, there have been numerous articles and comments effectively saying to the EEOC “I told you so.”  That is, the EEOC overstepped its authority in ruling that a 30% of total cost of self-only coverage incentive limit still fell within the ADA's requirement that any medical inquiries by “voluntary.” 

What these commentators may fail to realize, however, is that what might happen next is a scrapping of the entire wellness incentive rule under the ADA and GINA.  The EEOC may decide that it can't pick an incentive limit number that all employees would consider “voluntary” when being asked to divulge their personal health information.  As a result, we may go back to the EEOC Enforcement Guidance days when all the guidance we had from the EEOC about the meaning of “voluntary” was that incentives could not “require participation nor penalize employees who do not participate.”  For many of those who work in workplace wellness, that guidance was not very helpful. 

I understand that the hope of these commentators in light of the AARP order is that employers will no longer use incentives for workplace wellness programs.  That is certainly a viable option for many employers.  But I have heard too many professionals testify that incentives work for their organization, so I don't know if incentives will now miraculously disappear.

With that prospect in mind, what could happen in the world of workplace wellness incentives for “participatory” programs, such as incentivizing employees to take a health risk assessment?  (“Participatory” wellness programs are those programs that do not condition the obtaining of a wellness reward on the participant's health status.  See 

One real possibility is that without the ADA incentive limit rules, employers may feel free to raise participatory program incentives to 100% of the employee's premium cost, as was the case in the EEOC v. Flambeau and EEOC v. Orion Energy cases.  In particular, the court in the Flambeau case adopted the reasoning in Seff v. Broward County that the ADA safe harbor applied to the employer's wellness program, effectively insulating the program from the ADA's voluntary requirement.  Recall that the ADA safe harbor permits employers who have wellness programs tied to their health insurance plan to conduct medical examinations of employees to administer and underwrite insurance risks associated with an employer's health plan.  42 USC § 12201(c)(2)

The EEOC's wellness incentive rules under the ADA tried to decimate the safe harbor's applicability to workplace wellness programs by claiming that under no circumstances, regardless of whether the wellness program was offered as part of an employer's health plan, did the ADA safe harbor apply.  The EEOC's wellness incentive rules also clarified that the 30% incentive limit applied to both participatory and health contingent wellness programs; under the HIPAA wellness incentive rules, incentive limits do not apply to participatory programs.

Thus, without the EEOC wellness incentive limit rules, employers with wellness programs embedded within their health plan may rely on the ADA safe harbor when establishing incentives.  Even though the court in the Orion Energy case concluded that the ADA safe harbor did not apply to that employer's wellness program, careful planning by employer benefit plans could address the concerns expressed by the Orion Energy court.  Specifically, employers could more deliberately weave their wellness program into their health benefit plan to make a stronger case that the ADA safe harbor indeed applies for their wellness program, which would align with the rationale offered by the Flambeau and Seff courts.    

It remains to be seen what the EEOC will propose with regard to its wellness incentive rules, and how the workplace wellness community will respond.  But, I think it is premature to declare that workplace wellness incentives are dead.

About the Author

Barbara J. Zabawa

Attorney Barbara J. Zabawa started the Center for Health & Wellness Law, LLC after she recognized a need for legal services that shared a mission with providers to improve patient outcomes and population health, encourage wellness, protect patient interests in choice of provider and treatment options, provide holistic care, and expand information access. Attorney Zabawa has 20+ years of experience in the health care field, first receiving her Master's in Public Health from the University of Michigan before attending law school at UW Madison, where she graduated with honors in 2001. From 2003-2005, Ms. Zabawa clerked for the Honorable Barbara B. Crabb in the United States District Court for the Western District of Wisconsin and worked on a variety of matters, including employment, patent infringement, civil rights, and contract matters. She also served as a Skadden Fellow representing health care consumers on both the national and local level by helping consumers navigate private insurance coverage issues and advocating for their interests as a Funded Consumer Advocate at the National Association of Insurance Commissioners (NAIC). Attorney Zabawa has worked for a large health insurance company providing advice on the Affordable Care Act as well as HIPAA Privacy and Security compliance. In addition, she was in private practice at a large regional law firm for seven years, where she was a shareholder, led her firm's health care team and served as its HIPAA Privacy Officer. While in private practice, she handled a variety of health law matters, such as compliance with fraud and abuse laws, professional scope of practice matters, state licensing issues, HIPAA privacy and security compliance, Medicare and Medicaid reimbursement and conditions of participation compliance, Accountable Care Organization and other joint venture agreements, employment agreements, as well as business litigation. Attorney Zabawa is the author of the forthcoming book "Rule the Rules of Workplace Wellness Programs." She is a frequent speaker and writer both nationally and regionally on workplace wellness program compliance, the Affordable Care Act, fraud and abuse issues and HIPAA compliance. She has published several law review articles in the practice of health law and has been interviewed by TV, radio and print media regarding wellness, health reform, and HIPAA. She is a Board Member for Rogers Memorial Hospital Foundation, Board President for the Wisconsin Alliance for Women's Health, Board Member for Health Promotion Advocates, and currently serves on the Oversight Advisory Council for the Wisconsin Partnership Program and the State Bar Health Law Section Board. Education JD - University of Wisconsin Law School, cum laudeMPH - University of Michigan School of Public HealthBA - Lawrence University Admitted to Practice: • New York• Wisconsin• Federal District Court of the Western District of Wisconsin• Federal District Court of the Eastern District of Wisconsin• Court of Appeals for the Seventh Circuit• United States Supreme Court


Barbara J. Zabawa Reply

Posted Jan 16, 2018 at 17:06:47

Thanks for your post Julie. I would need to examine any particular employer’s wellness program to determine whether it meets various legal requirements. I appreciate you bringing your observations and thoughts to my attention. Let me know if I can be of assistance to the employer in the situation you describe. Barbara

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