U.S. employers can reward workers with as much 30 percent of thecost of their health insurance benefits in return for participationin programs to monitor weight, cholesterol, and other “wellness”measures, the Obama administration said Thursday.

Honeywell International Inc., for example, has given employeesincentives worth as much as US$3,500 to track health measures likebody mass index and heart health.

Many other employers have similar programs, though there has been debate over how far they can go. While thePatient Protection and Affordable Care Act allowed employers toincrease financial incentives for employee participation, the EqualEmployment Opportunity Commission (EEOC) under President BarackObama has sued companies, including Honeywell, arguing that theyviolated the Americans with Disabilities Act.

The proposed regulations issued today by the EEOC are intendedto reconcile the two laws. The rule “makes clear that wellnessprograms are permitted under the ADA, but that they may not be usedto discriminate based on disability,” the EEOC said in astatement.

Employers have struggled to make sense of a divide betweenfederal agencies over the issue and were pleased with theannouncement.

“The EEOC has removed the cloud of uncertainty,” said SteveWojcik, vice president of public policy at the Washington-basedNational Business Group on Health. The group represents largeemployers.

Widespread Wellness

While almost unheard of five years ago, more than a third ofU.S. employers now charge their workers a penalty that averagesabout $50 a month if they don't participate in wellness programs,according to benefits firm Towers Watson & Co. Some companiescharge as much as $1,600 a year to employees who refuse.

Those penalties typically come in the form of higher healthinsurance costs. The average premium for a single worker at a U.S.employer was $6,025 in 2014, according to the Kaiser FamilyFoundation, a Menlo Park, California, nonprofit that researcheshealth issues.

In Honeywell's program, workers and their spouses have beenasked to undergo screening that includes drawing blood to testcholesterol levels and a determination of body mass index bymeasurement of height, weight, and circumference.

Holdouts were assessed a $500 surcharge on their 2015 healthinsurance plans, and could lose as much as $1,500 in companycontributions to health savings accounts and be docked as much as$2,000 more in tobacco-related surcharges, according to the EEOC'scomplaint.

A judge ruled Nov. 3 in Honeywell's favor, denying the agency'srequest to block the company from assessing penalties on workerswho refused to participate.

“We have no plans to drop our pending lawsuits” against twoother companies, Orion Energy Systems Inc., a lighting company, andFlambeau Inc., a plastics manufacturer, said Christine Nazer, aspokeswoman for the EEOC, in an email.

Robert Ferris, a Honeywell spokesman, said the company was gladto see the rules. “The proposed regulations recognize that Congressviews wellness programs as having an important role to play in thehealth care marketplace, both in terms of promoting employee healthand helping to control health care costs,” Ferris said.

Incentives

Under Thursday's proposed rules, employers would not be allowedto threaten or otherwise coerce workers to participate, other thanby using financial rewards and penalties. Companies couldn't punishworkers with disciplinary measures such as suspension or firing ifthey opt out.

Financial incentives typically aren't as effective as employersexpect at luring workers into wellness programs, said SoerenMattke, a health researcher at the non-profit RAND Corporation.

One company that levied a $600 penalty on smokers who refused toparticipate in a cessation program found that more than 70 percentof the workers chose to pay the penalty, Mattke said.

While the proposed rules take a step toward a unified policywith other agencies that have issued their own regulations, thereare still differences. The Treasury Department, Health and HumanServices Department, and Labor Department have put out their ownguidelines, with differing rules to the EEOC's proposal on howlarge the incentives can be and how to deal with tobacco cessationprograms.

Under the EEOC proposal, employers wouldn't have access tomedical information about individual workers, only aggregated dataabout their entire workforce. Workers would have to be providednotices describing what information is collected in the wellnessprogram, how it's used, and who sees it.

The agency said it will take public comments on its proposaluntil June 19, before issuing final regulations.

– With assistance from Zachary Tracer and Shannon Pettypiece inNew York.

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