For years, employers have been offering their workers incentives to improve their health, with rewards ranging from reimbursing gym memberships to offering free screening tests.
But a possible conflict between two federal laws is leading companies to seek clearer guidance on what exactly they can include in their wellness programs.
While the Affordable Care Act allows employers to charge workers more for insurance if they don’t take steps to improve their health, the Americans with Disabilities Act prohibits employers from forcing workers to undergo medical exams or requiring them to disclose disabilities.
New Jersey-based Honeywell International is at the center of a complaint brought by the Equal Employment Opportunity Commission, which has brought this issue to the forefront.
[related]Honeywell, headquartered in Morristown, announced last year that its employees and their spouses would undergo a biometric test, recording their blood pressure, cholesterol and glucose levels, height, weight and waist measurements, as well checking for the presence of nicotine in their blood.
If they didn’t participate, they would face a penalty of up to $4,000, including $1,500 in lost employer contributions to a health savings account, and up to $2,500 in tobacco-use penalties and other surcharges.
Honeywell also said it could require its workers to improve their health risk factors, such as their blood pressure, in future years, according to an EEOC complaint filed in federal court in Minnesota in October.
The EEOC noted that the Americans with Disabilities Act prohibits employers from requiring biometric tests unless they’re needed to determine whether workers can perform their jobs or pose a direct threat to the health or safety of themselves or others.
Honeywell officials said the EEOC was out of step with the Affordable Care Act, and that no Honeywell employee was denied coverage or disciplined for not participating in the wellness program. The ACA specifically allows companies to impose surcharges for tobacco use, and to give rewards to workers whose biometric levels are in a normal or healthy range, while denying those rewards to workers who fail to make progress toward health goals.
“Biometric testing provides valuable private information to each employee about potentially life-threatening issues,” according to a company statement. “Honeywell wants its employees to be well-informed about their health status not only because it promotes their wellbeing, but also because we don’t believe it’s fair to the employees who do work to lead healthier lifestyles to subsidize the healthcare premiums for those who do not.”
John Sarno, president of the Employers Association of New Jersey, said the EEOC action sent a message to other employers to be careful when they design their wellness programs. His organization advises workers in employment law and provides employee benefit programs.
“It’s really two issues: whether the incentives or disincentives are so great as to be coercive, and the other issue is whether you have reasonable alternatives for people with medical conditions to achieve the incentives and get the rewards,” Sarno said.
Sarno said he expects Honeywell and the EEOC to reach a settlement that may include changes to Honeywell’s original wellness program.
He added that most New Jersey companies, particularly the small to medium-sized employers that he works with, won’t face any issues with their wellness programs. That’s because they only include incentives for employees to take positive steps to improve their health, such as gym reimbursements.
“What we’re telling our employers is just to have some very modest rewards,” Sarno said.
He said more aggressive wellness programs that include penalties are being used by larger corporations that self-insure, which means they cover employee health claims through a combination of direct payments and reinsurance.
Sarno said there also are business reasons for why employers don’t usually impose steep surcharges for not taking biometric tests or failing to make progress toward health goals.
“There’s no bottom line result — in other words, you can’t measure a reduction in healthcare claims,” Sarno said. “That’s what ultimately drives wellness programs. The goal is healthier employers.”
Employers have asked the EEOC to issue more specific guidelines for what they can and can’t include in wellness programs.