Wellness Incentives and Employer Provided Healthcare Plans

On Behalf of | May 12, 2015 | Employment Law -- Employer |

Under the Affordable Care Act, employers who provide health benefits may use financial penalties and incentives to encourage staff to participate in wellness programs which seek to evaluate and encourage workers’ healthy behaviors and other lifestyle choices. Programs which incentive workers to lose weight, quit smoking, eat healthy and partake in yearly health screenings, have become increasingly popular with the passage of the ACA in order for businesses to bring down healthcare costs for preventable conditions.

The Equal Employment Opportunity Commission (EEOC) had originally taken the position that asking employees to reveal certain health information in order to get a discount on their health insurance was discriminatory. Earlier last year, the EEOC filed suit against Honeywell stating that the participation terms of their wellness were discriminatory and in violation of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act. Honeywell originally required all covered employees and their spouses to submit to a biometric test in order to receive healthcare. This test measured various health biometrics, including blood pressure, cholesterol, waist circumference and nicotine. If an employee or their spouse refused, they could face penalties up to $4,000 each, through surcharges and lost contributions. The strange fact is Honeywell’s program incentives and penalties actually fell within the acceptable range required by the Affordable Care Act.

In order to fix the legal discrepancy, on April 20th, the EEOC proposed new rules for employer provided healthcare plans under the ACA. These proposals include limits on the size of financial incentives, confidentiality of employee medical information and prohibitions against firing workers who decline to participate or denying them access to the company health plan. Financial incentives can range as high as 30 percent of the cost of premiums for employee-only coverage, the commission said. The proposed regulations are now open for public comment for 60 days.

“The EEOC’s proposed rules are a positive step,” stated Honeywell’s director of communications, Bob Ferris. “The proposed regulations recognize that Congress views wellness programs as having an important role to play in the health-care marketplace, both in terms of promoting employee health and helping to control health-care costs.”

Though the EEOC’s proposed rules provide more clarity on what kind of screening is permissible for employees, the agency has left a number of issues at stake in the Honeywell case unresolved, such as wellness screening for family members. This conflict of laws is far from resolved. In March 2015, Senate and House Republicans also introduced legislation to eliminate confusion caused by the Equal Employment Opportunity Commission (EEOC) for employers offering employee wellness programs that reward healthy lifestyle choices.

Until the federal laws are no longer in conflict, employers must remember two key factors in establishing their healthcare policies: medical inquiries and exams within an employee health program must be voluntary and allowing incentives to encourage participation in wellness programs is still permitted by federal law.