Large employers offer workers hundreds of dollars in wellness plan incentives to get on the path to better health. Under Obamacare they have leeway to offer even more, but the Equal Employment Opportunity Commission had posed a roadblock, until now.
"We now know we can offer our employees a 30 percent discount on their health insurance if they will participate in a health risk assessment," said Michael Fischer, an attorney with Quarles & Brady, who advises employers on employment issues. "That is a huge step forward."
Under the EEOC's proposed rules released last week, health screening incentives would now be admissible under the Americans with Disabilities Act, known as the ADA, and the health privacy provision of HIPAA, or the Health Insurance Portability and Accountability Act. The plans are allowable as long as they are voluntary and "reasonably designed," with the intention of promoting health.
Reaction to the long-awaited rules from business groups and employment attorneys were generally positive, though what's not in the rules is raising some concerns.
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"We agree with the notion that the program must be aimed on health," said Maria Ghazal, vice president and counsel of the Business Roundtable, but she worries about the agency's discretion when it comes to determining what is a reasonable wellness plan.
"We want to make sure that 'reasonably designed' allows for innovation," she said. "You really want to tailor your plan to your population."
Questions about family incentives
The EEOC had taken the position that asking employees to reveal certain health information in order to get a discount on their health insurance was discriminatory. Last fall, the agency filed suit against Honeywell, claiming that its biometric screening program for employees and their families violated the ADA, and the health privacy provision of HIPAA.
Officials at Honeywell welcomed the proposed regulations.
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"The EEOC's proposed rules are a positive step," said Honeywell's director of communications, Bob Ferris, in a statement. "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."
Honeywell maintains that its wellness program is intended to promote health, complies with health privacy and disability regulations, and that employees are not penalized for opting out.
Yet, though the EEOC's proposed rules provide more clarity on what kind of screening is admissible for employees, the agency has left a number of issues at stake in the Honeywell case unresolved, such as wellness screening for family members.
"The EEOC in this regulation ... has expressly ruled out for the time being saying anything about whether you can include family members in one of these required health risk assessments programs in exchange for a discount on the family rate," said Fischer.
One of the issues the EEOC has raised for debate is the impact of pricey discounts on lower-wage workers. Is a wellness screening still voluntary, when not participating would mean losing out on thousands of dollars?
"That will add a layer of complexity for employers, because how do you determine what's a low income?" said Joseph Lazzarotti, an employment law attorney with Jackson Lewis. "It just becomes a numbers game."
The numbers can add up, when it comes to the extent of discounts allowed under the ACA. Honeywell offered employees a $500 annual premium discount and $1,500 in health savings account contributions for undergoing medical tests, and a $1,000 annual discount for nonsmokers. The EEOC complaint charges the company with effectively penalizing those who opt out.
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Yet, under Obamacare, employers face pressure to bring down the cost of employee health premiums. In 2018, the so-called Cadillac tax kicks in on high-cost health insurance plans. The law lets companies offer wellness incentives valued at up to a 30 percent of plan premiums, and up to a 50 percent discount to nonsmokers.
"I think employers would be best served if the final (EEOC regulation) tracks the bipartisan provisions that were in the ACA," explained Katy Spangler, senior vice president for health policy at the American Benefits Council, "particularly as they look to change their benefit design in anticipation of the 40 percent excise tax on high-cost plans, they need the maximum amount of flexibility."
The new EEOC proposal is open for public comments through June 19, with final rules expected later this year.