EEOC sues Honeywell for ACA approved wellness plan
Companies across the country are struggling to afford the rising cost of healthcare for their employees. Charges for medical services are still increasing, utilization is up, Obamacare layered in a 3%-5% increase in fees and taxes, and our employees are getting older and less healthy. With little hope on the horizon for external or systemic cost controls, corporations are looking inward, designing plans that promote and encourage wellness, healthy living, and most importantly, clinical engagement of their employees.
It is this last initiative, specifically the requirement of employees to have an annual biometric screening and/or blood test performed, that has caused a firestorm between the Equal Employment Opportunity Commission (EEOC) and several U.S. employers. In the last four months, the EEOC has filed three major lawsuits against companies for allegedly violating anti-discrimination laws like the Americans with Disabilities Act with the use of their corporate wellness programs. In late October, the EEOC filed a petition for a restraining order that would prohibit Honeywell Corporation from imposing penalties on employees who refused to participate in wellness program biometric screenings and blood tests. According to the federal agency, Honeywell wrongly charged financial penalties of up to $4,000 on employees who refused to participate in the wellness program testing. Honeywell vigorously defended its program, citing rules from the Affordable Care Act which allow employers to implement wellness penalties of up to 50% against employees who choose not to engage. Ever since the ACA was passed into law, more and more companies have incorporated a “carrot or the stick” approach to their wellness programs in hopes of encouraging employees to take better care of their health.
On November 3rd, U.S. District Judge Ann Montgomery denied the EEOC’s request for the time being, saying the court would require more time to debate the case before issuing a final ruling. Should the decision be reversed and the court rules in favor of the EEOC, Honeywell will most likely have to refund any penalties it collected from non-compliant employees.
Either way, the outcome of the Honeywell case and other related lawsuits could pose major implications for a large percentage of U.S. employers, specifically larger corporations, whose claims utilization has a direct impact on their medical premiums. These cases also speak to the juxtaposition between wellness program compliance and employee rights within the workplace. Corporations routinely provide incentives and penalties tied to their benefits offerings, either through richer plan offerings, lower contributions, and/or higher deductible reimbursement. The concept of employee engagement is typically not tied to clinical results such as actually lowering cholesterol, BMI or blood pressure, but rather the act of having the blood test, getting a physical, or having an age appropriate screening. Many studies have shown that once engaged, employees can, with the help of their doctor, identify risk factors at an earlier stage, reducing costs and helping employees maintain health. Still, based on what has occurred with the EEOC lawsuits, the incorporation of financial incentives or penalties into these programs invites a whole new set of challenges to the mix.
WGA will continue to monitor the EEOC ‘s claims against Honeywell and any developments in the case as they pertain to elements of the ACA.
About the Author
Christopher Nadeau is a Principal at WGA and head of the Employee Benefits Group. Mr. Nadeau counsels his department to develop and redesign employee benefits programs to match the corporate philosophy, long-term needs and objectives of their clients. He is also an industry leader on Healthcare reform and the cost impact and administrative burden on employers.