Obama administration proposes removing hurdle to ‘wellness’ penalties

By Sharon Begley, Reuters

NEW YORK - In what would be a significant and hard-fought victory for U.S. businesses, the Obama administration on Thursday said it will propose new rules for workplace wellness programs that would treat programs that penalize workers thousands of dollars for not participating as voluntary.

That decision, which will be published in the Federal Register on Monday, opening 60 days for public comment, would likely remove a legal challenge to the wellness program at Honeywell International Inc.

Last year, the Equal Employment Opportunity Commission (EEOC) sued Honeywell, arguing that penalties in its workplace wellness program, which could reach $4,000 a year for workers who chose not to participate, made it involuntary.

The 'voluntary” standard is critical because landmark anti-discrimination laws have largely prohibited employers from asking questions about workers' health unless the queries relate to an individual's ability to perform a job.

Workplace wellness programs, which the vast majority of large U.S. firms have instituted, often require employees to answer detailed questions about their family medical histories and personal health, and to undergo employer-specified medical exams.

The programs have expanded recently because President Barack Obama's signature health care law of 2010 allows employers to charge non-participants 30 percent more for health coverage, including premiums and deductibles, which can amount to thousands of dollars.

The EEOC, therefore, had to reconcile that Obamacare provision with the prohibition on involuntary wellness programs, which is part of the 2010 Americans with Disabilities Act (ADA).

Although that law 'limits the circumstances in which employers may ask employees about their health or require them to undergo medical examinations, it allows such inquiries and exams if they are voluntary and part of an employee health program,” the EEOC said in a statement.

The agency added that the 'proposed rule makes clear that wellness programs are permitted under the ADA,” and that 'companies may offer incentives of up to 30 percent of the total cost of employee-only coverage in connection with wellness programs.”

Reuters reported in November that leading U.S. corporations, angered by the EEOC's legal action against Honeywell's program, were threatening to pull their tacit support for Obamacare unless the government backed off.