Emily's Office

EEOC Backs Off in Wellness Program Regs

Yesterday the Equal Employment Opportunity Commission (EEOC) lifted the veil on long-awaited regulations regarding employer wellness programs. These regs back off on the EEOC’s earlier position that excessive penalties in wellness programs make them involuntary and thus a violation of the Americans with Disabilities Act (ADA).

EEOC’s original position really ticked off employers who want to impose bigger penalties on employees who don’t hop on their wellness bandwagon and a political scuffle followed. A group of legislators introduced a bill to exempt employers with wellness programs from portions of the ADA that might get in the way of their wellness program penalties.

The proposed regs that will be open for comment beginning Monday essentially provide guidance that brings the EEOC into line with guidance issued by the federal departments of HHS, Treasury, and Labor to implement provisions of the Affordable Care Act related to wellness programs.

The regs provide some important protections. Most significant is the fact that people who cannot meet arbitrary outcome hurdles like a weight goal must be fully informed that they are entitled to an alternative standard that they can meet. But potentially coercive penalties for low-wage workers are allowed.

Consumer advocates expressed disappointment. Attorney Jennifer Mathis of the Bazelon Center for Mental Health Law said the regs “diminish the protections that workers have against being coerced to disclose medical information to their employers when that information is unrelated to their ability to do their jobs.”

Karen Pollitz of the Kaiser Family Foundation said:

Without question, the EEOC has stepped away from its prior enforcement guidance. Now they are saying it is OK to penalize people as long as the financial penalties or incentives, as well as other aspects of the program, are within these limits.

The folks who were previously mad at the EEOC appear to be delighted now. Speaking for Honeywell, the company that got into trouble with EEOC because of their penalties, Robert Ferris said:

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.

The real deal here is that these regs are a win for the six billion dollar wellness industry and employers that want to use wellness programs to shift health costs to employees while pretending to promote wellness.

Penalties are mostly effective as a tool for cost shifting. According to Soeren Mattke of the Rand Corporation, the threat of penalties doesn’t lure people to participate in wellness programs. He cited the experience of a company that threatened a $600 penalty for people who would not participate in a smoking cessation program. More than 70% of their targeted employees chose to pay the penalty instead of joining the program.

If getting people to quit smoking is the goal, those penalties were a failure. If the goal is to shift costs to employees, they worked pretty well. With the flexibility to charge much bigger penalties, employers can find the sweet spot for cost shifting.

For companies that want to promote a culture of health, big penalties — which have no value for improving health outcomes — are irrelevant. The companies that really care about their employees’ health are looking elsewhere for better outcomes.

Click here for more information from the EEOC. Click here to read the proposed regs and come back to this link after Monday to comment. Click here to read more from Reuters.

Emily’s Office, photograph © paolobarzman / flickr

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