EEOC Limits on Wellness Programs

Written by benefitexpress | August 15, 2016

EEOC Limit Wellness Incentives

More and more businesses are starting wellness programs in conjunction with their companies’ benefit offerings. And why wouldn’t they? Corporate wellness programs have been linked to increased engagement, reduced absenteeism, and health spending savings. However, it’s unlikely that your workers will want to do more, well, work just because you ask them to. Incentivizing wellness program participation is essential for success.

Up until now, non-cash incentives were considered difficult to manage. However, multiple third-party sites (if not the stores themselves) make buying bulk gift cards or customized merchandise easy. So with the one major disadvantage dealt with, what are the advantages of non-cash wellness incentives? For one, they’re more memorable. When employees receive cash incentives, these are generally part of a paycheck. While the boost is nice, most employees treat that cash as they would their paycheck; they use it toward mundane, everyday purchases. A gift card or a well-thought out item as an incentive is much more memorable. An employee is unlikely to remember the gallon of milk or toilet paper they bought with that cash, but they will definitely remember a play they saw after receiving tickets from your company. This memorable gift can lead to increased satisfaction and loyalty, which no amount of cash would provide for most employees. This adds another layer to the ROI you receive from your wellness program.

One more benefit of motivating your employees with non-cash incentives, especially with experiences rather than any financial motivation? It’s easier to stay in compliance with incentive limits. In order to keep wellness programs truly voluntary (which they must be in order to be legal), incentives must be low enough to keep the amount from being “coercive”. A wellness program with a high incentive would make it difficult for an employee to reasonably decline participation. Especially when sensitive health information would be disclosed to an employer, it’s essential to ensure that disclosure of this information is truly voluntary.

So, how does the EEOC limit wellness incentives to keep them from being coercive? The final ruling was released in May, and defines what constitutes a wellness program and defines exactly what makes it voluntary. Under the final ruling, the limit for incentives is 30% of the total cost of self-only health insurance under the lowest-cost plan they offer. If the employer does not offer health insurance, they must base their incentive on what a 40-year-old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care exchange in the employer’s primary location. This applies to wellness programs that include mandatory health screenings or health and disability related inquiries as a prerequisite to participate. If the program does not make such inquiries, the limit is 50% of self-only coverage. The limit also increases when the program is designed to promote smoking cessation, up to 50% of coverage. However, an employer cannot require a physical screening to ensure smoking cessation without decreasing incentives to 30% of coverage.

Topics: Health & Wellness