Navigating the Wellness Program Rules for 2019


Employee Health & Benefits National Compliance Leader
+1 972 770 7153
September 14, 2018

What a difference a year can make.  Dealing with the various and differing wellness program requirements under HIPAA, the ADA, and GINA remains challenging, but we finally had a regulatory framework to work with for all three laws in 2017 and 2018.  That was apparently too easy as a federal court determined that the Equal Employment Opportunity Commission (EEOC) hadn’t done enough to justify its ADA and GINA wellness incentive limit rules and ordered the EEOC to try again. After the EEOC indicated it would be unable to complete revising its rules before 2021, the court issued an order vacating the existing ADA and GINA wellness incentive rules as of January 1, 2019.

So now what?
This leaves employers with a few options to consider heading into 2019:

  1. Leave existing wellness programs that comply with the current HIPAA, ADA, and GINA regulations alone without making any design changes;
  2. Modify existing wellness programs by eliminating or reducing incentives for activities that are subject to the ADA and/or GINA; or
  3. Determine whether to implement new wellness program activities with incentives that are subject to the ADA and/or GINA.

We recommend employers discuss their wellness program design with their legal counsel before choosing a course of action, but leaving an existing compliant wellness program alone seems to be a reasonable course of action for now for reasons we will discuss below.  We also recommend employers carefully consider whether to implement new or additional programs that rely on the soon-to-be-vacated wellness incentive limits until further guidance is available.

Recap of the existing wellness incentive rules
The three sets of wellness rules have much in common, such as a general requirement that a wellness program be reasonably designed to improve health and/or prevent disease without being overly burdensome or a subterfuge for discrimination against participants.  A key difference between them is when and how their wellness incentive rules apply.

  • HIPAA – Only “activity-only” and “outcome-based” wellness programs are subject to HIPAA’s incentive limits.  An activity-only program requires participants to complete an activity related to their health status without actually requiring a specific health outcome.  Examples include walking and healthy eating challenges.  An outcome-based program requires participants to actually achieve or maintain a specific health outcome.  Examples include requirements for participants to be tobacco free or achieve biometric targets.

    The cumulative amount of all incentives cannot exceed 30% of the total cost of coverage (employee + employer contribution) or 50% of the total cost of coverage provided the excess over 30% is used toward tobacco cessation incentives.  A wellness program could utilize the entire 50% limit for tobacco incentives.  If spouses and/or dependents may participate, the incentive may be based on the total cost of coverage for the enrolled tier such as employee + spouse instead of employee-only.  A program must include reasonable alternatives to qualify for incentives if it is medically inadvisable or unreasonably difficult for a participant to participate in an activity-only program or if a participant fails to achieve a required outcome in an outcome-based program.

  • ADA – Wellness programs are subject to the ADA’s rules if the program includes questions that may relate to whether the participant has a disability, such as family medical history questions, or requires the participant to undergo a medical examination.  Participation must be voluntary.  Under the ADA’s wellness regulations, participation is considered voluntary if the cumulative amount of all incentives does not exceed 30% of the total cost of employee-only coverage.  There are no reasonable alternative requirements, but reasonable accommodations must be provided to enable participants with disabilities to participate.  For example, an accommodation may be required to enable hearing and/or visually impaired participants to complete a health risk assessment.  An employer cannot limit or deny access to health plan coverage based upon participation which prevents an employer from using participation as a gateway to a richer plan design.

  • GINA – GINA prohibits the use of genetic information for health plan underwriting.  In today’s wellness program context, GINA primarily impacts health risk assessments as family medical history questions are considered genetic information.  Participation must be voluntary and occur after enrollment.  Under GINA’s wellness regulations, a spouse’s completion of a health risk assessment is considered voluntary if the incentive does not exceed 30% of the total cost of employee-only coverage.  The GINA regulations do not address permitted incentives for employees to complete health risk assessments as these are already covered by the ADA’s rules.  No incentives may be offered for dependent children to participate.

We’ll provide an example of how the existing wellness incentive limits under HIPAA and the ADA work at the end of this article.

Because, because, because
The court in AARP v. EEOC held that the EEOC failed to sufficiently justify the use of a 30% incentive limit to satisfy the voluntary requirement under the ADA and GINA because it largely relied on the use of the 30% limit standard from HIPAA without sufficient explanation for why this should be considered “voluntary” or addressing the differences between the laws.  However, the court didn’t say that the EEOC’s wellness incentive limits were inappropriate.  Instead, it merely indicated that the EEOC hasn’t provided enough guidance to justify the 30% limit yet.  The court also didn’t vacate any other provisions of the ADA and GINA wellness regulations, so the rest of the rules remain in effect.  There hasn’t been any indication from the EEOC that it intends to back down, so the EEOC’s next attempt may simply rehash the 30% limit with additional support (i.e. the 30% standard is voluntary “because, because, because”).

Be careful what you wish for
Was this a victory for the AARP and potential plaintiffs contemplating suing their employers in 2019 over wellness programs?  We’re not so sure. 

Potential plaintiffs generally have to file a charge with the EEOC before filing a lawsuit under the ADA or GINA.  The EEOC investigates the claim and issues a right to sue at the conclusion of the investigation.  It seems unlikely the EEOC will find discrimination and intervene if a wellness program complies with the EEOC’s existing final regulations as drafted, particularly if the EEOC intends to stick with its wellness incentive rules and provide greater justification for them later.  Plaintiffs might anticipate this and choose to request a right to sue before the EEOC’s investigation is completed.  A lack of support from the EEOC isn’t fatal to a plaintiff’s claims of discrimination in court, but it certainly doesn’t help.   

It’s also worth a mention that employer wellness programs were faring pretty well under the ADA in court before the final regulations were issued.[1]  The court in AARP v. EEOC vacated the existing wellness incentive rules under the ADA and GINA and ordered the EEOC to try again, but it did not explicitly reject the incentive limits or find that they couldn’t be justified.  There’s no basis to assume a wellness program that relies on those incentive limits will automatically lose in court. 

[1] Remember, only the wellness incentive rules have been vacated.  The EEOC specifically rejected the bona fide benefit plan safe harbor relied upon in Seff v. Broward County and EEOC v. Flambeau in the preamble to its final ADA regulations and attempted to strip this approach out, so this probably remains unavailable today.

In the meantime…
For these reasons, it seems reasonable for employers to stick with existing wellness programs that comply with the HIPAA, ADA, and GINA wellness rules as currently drafted until further guidance becomes available.  That said, employers may consider tapping the brakes and not implementing any new or additional programs that rely on the soon-to-be vacated wellness incentive rules.  There will be lawsuits and with the current uncertainty, employers may wish to avoid potential trouble they do not already have.    

Example under the existing wellness incentive rules:
In the example below, assume the total cost of employee-only coverage is $5,000/year and only employees are eligible to participate in the wellness program.

Wellness Activity and Incentive



$250 incentive for completing a health risk assessment with health-related questions

(participatory-only activity)

$250 counts toward
incentive limit

$250 incentive for participating in biometric screening without regard to results

(participatory-only activity)

$250 counts toward
incentive limit

$1,200 annual surcharge for using tobacco based solely on employee attestation

$1,200 counts toward
incentive limit*





Total permitted incentives


$1,500 (30% * $5,000) or up to $2,500 (50% * $5,000) if excess over $1,500 used for tobacco incentives

$1,500 (30% * $5,000)

Total incentives used

$1,200 = compliant

$500 = compliant

*HIPAA’s reasonable alternative standard rules apply.


The information contained herein is for general informational purposes only and does not constitute legal or tax advice regarding any specific situation. Any statements made are based solely on our experience as consultants. 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. The information provided in this alert is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency is not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2018 Marsh & McLennan Agency LLC. All Rights Reserved.