Benefits

Wellness Programs in the Crosshairs

By Kelley Butler

Dec. 22, 2014

The U.S. Equal Employment Opportunities Commission has sued four employers in as many months, alleging that the companies’ wellness programs are discriminatory, unlawfully coercive and/or violate federal employment laws — including Health Insurance Portability and Accountability Act, Americans with Disabilities Act, Genetic Information Nondiscrimination Act and Civil Rights Act.

Clearly, there is a disconnect within the federal government: While the White House and the U.S. Department of Health & Human Services are pushing employers to take advantage of expanded wellness program incentives under the Affordable Care Act, the EEOC is suing employers over said incentives.

Until the government gets on one accord, here are some tips for employers to design and communicate wellness program features — whether required or voluntary — that can help keep them out of court. (But first, a disclaimer to keep me out of court: I am not an attorney, and this column does not contain legal advice. Employers should consult legal counsel about creating wellness programs that meet all compliance rules and standards.)

1. Beware ‘surcharges’ that could be construed as penalties.

In the EEOC’s case against Honeywell, the agency is targeting the company’s surcharges on employees who don’t complete wellness actions. Under the Honeywell program, employees who don’t complete a health questionnaire and biometric screening have an extra $500 tacked onto their annual their medical plan costs. Employees who use tobacco are charged $2,000, and employees stand to lose up to $1,500 in company health savings account contributions for not participating in wellness activities.

EEOC officials allege the Honeywell program and its associated surcharges are penalties designed to compel participation and violate the ADA and GINA. The ADA prohibits employers from requiring non-job-related medical exams; GINA protects employees against discrimination based on genetic information.

Is a health risk assessment or biometric screening a medical exam? Do the surcharges/penalties equal compulsion? Can screening results, which employers only see in aggregate, be discriminatory? These are for courts to answer, but employers may want to beware surcharges or penalties until judges can clarify. They may also want to be especially careful about how they frame and communicate incentives vs. surcharges, particularly if the value of the financial harm from surcharges could outweigh the financial gain from the maximum incentive.

2. Offer incentives, yes. Outline requirements … perhaps not so much.

Again, Honeywell’s program raised the ire of the EEOC because it views the surcharges for non-participation as compelling employee participation. Most policies seem to protect employers in offering carrots to spur employees’ wellness participation. Offering sticks, on the other hand, is not as clear — at least not legally.

In one of the EEOC’s other suits, it targeted Orion Energy Systems of Manitowoc, Wisconsin,  because it required employees who didn’t participate in its wellness program to pay the entire cost of their medical premiums, even going so far as to fire one employee for non-participation.

A third EEOC lawsuit against plastics firm Flambeau Inc. asserts the company violated federal law when it required an employee to complete a biometric screening and health risk assessment. When the employee didn’t complete the steps, the suit alleges that Flambeau terminated the employee’s medical coverage.

3. Proceed with caution with biometric screenings.

According to the National Business Group on Health, 95 percent of employers sponsor a wellness program, and many of those feature a health risk assessment, biometric screening or both. However, it’s those program elements — biometric screenings in particular — that have proved troublesome.

In its lawsuit against Honeywell, the EEOC went so far as to petition a U.S. District Court for a temporary restraining order to block the company’s surcharges for non-participation in wellness activities. Although the request was denied, it illustrates the agency’s commitment to fighting against required screenings.

Mandating biometric screenings already have come under fire for exacerbating our culture of over-testing and contributing to waste in health care spending. These criticisms, in addition to the potential to be a target for federal lawsuits, may be reason enough to avoid them altogether.

Until there is formal guidance from federal agencies, and/or legal precedent from the courts, employers may want to adopt a twist on the “apple a day” cliché when it comes to wellness their programs: Giving carrots all day keep the EEOC away; giving sticks brings the EEOC quick.

Kelley M. Butler is the editorial director at Benz Communications, an HR/benefits communication strategy firm. Before joining Benz, Butler spent 11 years at Employee Benefit News, including seven as editor in chief. To comment, email editors@workforce.com

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