A federal court is letting a wellness program's financial penalties take effect, but is considering the question of how much is too much, leaving corporate America and insurers waiting.
A federal judge in Minneapolis has rejected a request by the Equal Employment Opportunity Commission (EEOC) to stop Honeywell from imposing financial penalties on employees in its health plan who decline to take health risk assessments and biometric screenings.
Even as Honeywell implements its wellness program, though, the case will go forward, as U.S. District Judge Ann Montgomery considers the EEOC's argument that the manufacturing conglomerate is crossing the line of voluntary participation and violating the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act.
According to two Minnesota-based workers who filed complaints with the EEOC, Honeywell is penalizing employees who opt-out of the wellness program by denying them a $1,500 health savings account contribution and imposing a $500 surcharge (plus $1,000 for tobacco use).
Honeywell's wellness program "imposes a penalty upon employees to make them participate in the biometric testing," is not related to the nature of the jobs, and "is not voluntary," the EEOC wrote in its court petition.
Honeywell disagrees with those allegations and calls the lawsuit frivolous. The incentives "are in strict compliance with both HIPAA and the ACA's guidelines, which were designed by Congress to encourage healthier lifestyles while helping to control healthcare costs," the company said in statement.
"No Honeywell employee has ever been denied healthcare coverage or disciplined in any way as a result of their voluntary decision not to participate in our wellness programs," the company continued.
Wellness programs are now the norm in corporate health benefits. Some 95 percent of employers offered a health risk assessment, biometric screening or other wellness program this year, and almost 75 percent used some form of incentives to spur participation, according to a survey by the National Business Group on Health.
However, there are still some legal ambiguities when it comes to what is voluntary, compulsory or discriminatory in wellness programs -- despite the ACA's allowances for incentives to participate.
While the EEOC has sued three companies with allegations of wellness programs violating the ADA and GINA, the federal Commission has not given employers a clear sense of how to comply with nondiscrimination laws and the ACA, which allows employers to vary premiums by up to 30 percent based on participation in wellness programs.
"The EEOC has had numerous opportunities to provide that guidance but has failed to do so," said Brian Marcotte, president and CEO of the National Business Group on Health. "Their lack of clear guidance, plus the recent legal action conflicts with the message of HIPAA and the Affordable Care Act which encourages the adoption and expansion of programs that benefit the health of employees and their families."
According to some legal scholars, it's possible that the ACA's regulation of wellness programs could actually be at odds with nondiscrimination laws like the ADA and GINA. "Is a plan that varies premiums by 30 percent truly voluntary?" asked University of Michigan law professor Nicholas Bagley in an Incidental Economist blog post.
Depending on how the EEOC and federal courts interpret the ACA and non-discrimination law, the wellness space could face some "profound implications," worries Marcotte, from the National Business Group on Health.
The EEOC's suit against Honeywell was the third of the year targeting corporate wellness programs, although the other two concern allegations of more aggressive financial incentives and penalties.
This summer, the EEOC sued Orion Energy Systems, a Wisconsin-based company accused of terminating a former employee who had declined to participate in a wellness program and faced the penalty of having to pay all her insurance premiums plus a $50 penalty.
That case remains unresolved, as does another EEOC suit against another Wisconsin company. The EEOC is suing a plastics manufacturer Flambeau, accusing the company of terminating insurance coverage for an employee who did not want to take a health risk assessment.