Today, the U.S. Equal Employment Opportunity Commission ("EEOC") issued a Notice of Proposed Rulemaking addressing wellness program incentives under the Genetic Information Nondiscrimination Act ("GINA Proposed Rule") in the Federal Register ( here). This NRPM comes on the heels of the EEOC's proposed rule covering wellness program incentives under the Americans With Disabilities Act ("ADA Proposed Rule") released last April and discussed here. Today's proposal should be required reading for corporate counsel and HR executives. The EEOC's litigation enforcement program has targeted wellness programs, and GINA discrimination issues is also on the Commission's radar.
Today's Proposal
The EEOC received about 340 substantive comments from the ADA Proposed Rule, and one of many major concerns from the regulated community was the EEOC's piecemeal approach to addressing wellness program incentives because it ignored spousal incentives. Today's proposal attempts to fill that gap. However, the GINA Proposed Rule still ignores the primary concerns of the regulated community — that the EEOC is effectively usurping the regulations issued by the Departments of Labor, Health and Human Services, and Treasury (the "Tri-Agency Regulations") by establishing a parallel — and more onerous — regulatory scheme related to wellness program incentives.
The new proposal likely represents an improvement over the ADA Proposed Rule on wellness programs in that the 30% incentive is calculated based on the total cost of the employee's chosen coverage, but the devil is in the details. For example, the proposed apportionment provision permits a total incentive of $4,200 for a plan that costs $14,000, but only where the allocation to the employee is $1,800 if the single coverage plan costs $6,000 and $2,400 to the spouse and/or other dependents. This mechanism ignores practical reality because many employers design wellness programs by providing an equal incentive for employees and spouses. As such, this requirement is inconsistent with the Tri-Agency Regulations.
In addition, the EEOC continues to assert that it has the authority to define just what is a "reasonably designed" wellness program. Congress and the Administration have already defined the term in the Affordable Care Act ("ACA") and the Tri-Agency Regulations. Introducing a "similar" definition means that the EEOC intends to adopt a different standard than the one previously adopted by Congress in the ACA or the Departments of Labor, Treasury and HHS in the Tri-Agency Regulations. Moreover, by importing the "reasonable design" requirement from "health-contingent wellness program," the GINA Proposed Rule (again as in the ADA Proposed Rule) imputes the burdens previously associated only with health-contingent wellness programs to all wellness programs, which exceeds what is required under the ACA and the Tri-Agency Regulations.
Implications For Employers
While this rule, if promulgated, would provide some clarity for employers, it would, in conjunction with the ADA Proposed Rule, establish a parallel – and more onerous – compliance scheme than the scheme set forth in the Tri-Agency Regulations issued by agencies with the necessary authority and expertise. Ultimately, because more onerous regulations always establish the baseline when authority is diffused among various authorities and agencies, these EEOC regulations would become the de facto law of the land, usurping the Tri-Agency regulations and establish more roadblocks for employers to provide incentives to their workforces and their families. The comment period will be open for sixty days until December 29, 2015. Stay tuned!
Readers can also find this post on our EEOC Countdown blog here.
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