Do it or else. Increasingly, that’s the message from employers who are offering financial incentives to workers who take part in wellness programs that include screenings for blood pressure, cholesterol and body mass index.
But the programs are under fire from the Equal Employment Opportunity Commission, which filed suit against Honeywell International in October charging that the company’s wellness program isn’t voluntary and thus violates federal law.
It’s the third lawsuit the EEOC has filed this year taking aim at wellness programs. The lawsuits highlight the lack of clarity in the standards these programs must meet in order to comply with both the Affordable Care Act and the Americans with Disabilities Act.
Honeywell, based in Morristown, N.J., got a reprieve in November, when a federal district court judge declined to issue a temporary restraining order that would have prevented the company from proceeding with its wellness program incentives in 2015.
But the issue is far from resolved. The EEOC is continuing its investigations, and business leaders are criticizing those actions. The Business Roundtable expressed “strong disappointment” in a letter to administration officials.
“The EEOC has chosen litigation over regulation,” says J.D. Piro, a senior vice president at Aon Hewitt, who leads the benefits consultant’s health law group.
In the Honeywell wellness program, employees and their spouses are asked to get blood drawn to test their cholesterol, glucose and nicotine use, and also have their body mass index and blood pressure measured. An employee who refuses is subject to a $500 surcharge on health insurance premiums and could lose up to $1,500 in Honeywell contributions to a health savings account. A worker and spouse are also each subject to a $1,000 tobacco surcharge if they refuse to do the screening. That means a couple could face a combined $4,000 in financial penalties.
“Under the [Americans with Disabilities Act], medical testing of this nature has to be voluntary,” the EEOC said in a news release announcing its request for a restraining order. “The employer cannot require it or penalize employees who decide not to go through with it.”
Honeywell sees the situation differently. “Wellness is a win-win,” says Kevin Covert, vice president and deputy general counsel for human resources at Honeywell. In time, the company expects to see lower claims costs while workers avoid health problems.
Further, Covert says, it’s easy for employees and their spouses to avoid the tobacco surcharge. Smokers can take a 15-minute online tobacco cessation course, while nonsmokers can simply call up the health plan and certify that they don’t smoke.
Employers are watching the Honeywell case closely because many have similar incentive-based wellness plans, says Seth Perretta, a partner at Groom Law Group, a Washington, D.C., firm specializing in employee benefits.
Eighty-eight percent of employers with 500 workers or more offer some sort of wellness plan, according to a 2014 national survey by the benefits consultant Mercer. Of those, 42 percent offer employees incentives to undergo screening, and 23 percent tie incentives to actual results, such as reaching or making progress toward blood pressure or BMI targets.
The Affordable Care Act encourages employers to offer financial incentives to participate in wellness programs. It allows plans to incorporate wellness incentives — both penalties and rewards — of up to 30 percent of the cost of employee-only coverage, an increase over the previous limit of 20 percent. If the wellness activity aims to help someone quit smoking or cut back, the incentive can be up to 50 percent.
Under the Americans with Disabilities Act, employers aren’t allowed to discriminate against workers based on health status. They can, however, ask workers for details about their health and conduct medical exams as part of a voluntary wellness program.
Employers, patient advocates and policy experts want the EEOC to spell out what “voluntary” means under the ADA and clarify the relationship between the two laws.
The EEOC is always reviewing its guidance, but there’s no time frame for issuing new guidance, says spokesperson Kimberly Smith-Brown.
Despite employers’ enthusiasm for wellness programs, “there’s no good research that shows these programs actually improve health outcomes or lower employer costs,” says JoAnn Volk, a senior research fellow at Georgetown University’s Center on Health Insurance Reforms.