Outcomes-based wellness programs are growing in popularity among employers throughout the country. Indeed, according to a recent Mercer benchmarking study, 22 percent of employers managed an outcomes-based wellness program in 2017. Yet, continued uncertainty regarding the ways in which financial rewards and penalties under these programs are calculated, prompted by a still-unresolved court case, has caused confusion and anxiety among employers, workers, and even regulatory agencies.
The issue at hand is complex, so a bit of background is in order. At a fundamental level, today’s employers want their employees to be healthy. Studies have shown that healthy employees are more productive, engaged and efficient. They also help to keep their employers’ overall health care costs in check.
This desire for a healthy workforce has led many employers nationwide to embrace outcomes-based wellness programs. Such programs feature written or electronic Health Risk Appraisals (HRAs) and biometric screenings for things like blood pressure, blood sugar, cholesterol and body mass index (BMI). Based on screening results, workers who don’t fall within pre-established healthy levels risk financial penalties in the form of higher premiums.
The Equal Employment Opportunity Commission (EEOC) is one of several agencies that, in conjunction with the Americans With Disabilities Act (ADA), HIPAA and the Genetic Information Non-Discrimination Act (GINA)), regulate corporate wellness programs. In May 2016, the EEOC issued final rules detailing incentive limits for programs that require disclosure of health information (which includes outcomes-based wellness programs), one of which stated that a wellness program could impose a financial reward or penalty of up to 30 percent of the total cost of self-only health insurance. Simply put, the differentiation in premiums between someone who hits these ranges and someone who doesn’t can be up to 30 percent.
With that, the American Association of Retired Persons (AARP) sued the EEOC based on the claim that this rule violates the ADA and other regulations. Late in 2017, a District Court ordered the EEOC to reconsider the limits placed on wellness programs to be more in line with the ADA. While it went on to rule that the current EEOC regulations could remain in effect through 2018, it mandated that such action occur before January 2019.
Earlier this spring, the EEOC stated it has no imminent plan to issue new rules. According to a May 2018 memo distributed by Be Well Solutions (Be Well), a wellness program provider, the EEOC chose to wait until the Trump EEOC leadership is in place to respond. As a result, the entire issue of premium differentials is in flux. No one is sure whether the EEOC will comply with the court’s order by Jan. 1, 2019; whether the court will order the EEOC to revisit its mandate after Jan. 1, 2019 if it doesn’t heed the original order; or whether it will simply let the issue linger with no clear mandate.
What Should You Do if You Have an Outcomes-Based Wellness Plan?
In its recent memo, Be Well posed three questions that have far-reaching implications for employers with outcomes-based wellness programs:
- Would the EEOC enforce the ban on incentives involving medical exams or inquiries?
- Will private lawsuits ultimately determine the manner in which incentives are handled?
- How far will the AARP push the issue?
It’s very likely that no resolution will occur in time to plan for your company’s 2019 benefits and wellness strategies. For companies with outcomes-based wellness programs, nothing regarding this issue has been resolved, so your program components, including premium differential limits, will not be affected through Dec. 31, 2018. Things could eventually change, however, including those limits, so it’s critical that whomever is running your wellness program is on top of the latest developments regarding this issue. They should:
- Respond to any and all questions regarding the issue with clear explanations, including their short- and long-range plans
- Determine whether the company is better off continuing current programs considering the risk of EEOC enforcement or private legal action—or tie incentives to wellness initiatives that are not subject to EEOC rules
- Ensure the program complies with all current regulations
- Be prepared to offer innovative incentive options in response to any changes the EEOC may make
If there is any question in your mind regarding your plan administrator’s understanding of this important yet complex issue, seeking an outside resource with deep knowledge and experience in wellness program compliance would be a wise move.
For more information on this evolving issue, or to learn more about outcomes-based wellness programs, please contact Megan Baker, Manager of Client Services and Wellness Manager, Cleveland Market, Marsh & McLennan Agency, formerly Benefits Resource Group. Marsh & McLennan partners with privately held businesses, individuals and public companies that seek solutions that go beyond traditional employee benefits services to help them better manage their bottom line. You may contact Megan by phone at 216-393-1846 or by email at Megan.firstname.lastname@example.org.
Disclaimer: This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.