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It takes two to tango with a wellness program: The employee or spouse volunteers medical information, and in return, gets a meaningful health assessment. This does depend on a person agreeing to participate, though, and incentives are one way to get an employee’s or spouse’s buy-in.
However, the Equal Employment Opportunity Commission (EEOC) has set out a proposed rule that will make the provision of incentives to spouses difficult, according to Jan. 28 comments from the Society for Human Resource Management (SHRM).
The comments were in response to an Oct. 30, 2015, proposed rule on the Genetic Information Nondiscrimination Act (GINA) and spousal incentives. The proposed rule outlined caps on incentives for participation in wellness programs.
An employer may offer an incentive to an employee participating in its wellness plan, worth up to 30 percent of the cost of health care coverage for himself or herself, the proposed rule noted.
By comparison, the proposed rule would provide that the maximum incentive that could be offered to an employee’s spouse in exchange for health information could not exceed 30 percent of the total cost of coverage for the plan in which the employee is enrolled, minus 30 percent of the total cost of self-only coverage.
“In other words, an employee and that employee’s spouse can fill out the same health risk assessment as part of their participation in an employer-sponsored wellness program, yet under the proposed rule, the spouse would be legally entitled to receive a larger inducement for his or her participation in the program,” SHRM noted.
This standard is hard to wrap one’s brain around.
Suppose an employer offers health insurance coverage at a total cost of $14,000 for each employee and his or her dependents, and $6,000 for each employee’s self-only coverage. The maximum inducement for the employee is 30 percent of self-only coverage or $1,800. For the spouse, it is 30 percent of the total cost of the plan ($4,200) minus 30 percent of the self-only coverage ($1,800), or $2,400.
By contrast, the Affordable Care Act (ACA) rule is simple—allowing for 30 percent of the cost of coverage. The proposed GINA rule is complex, and will act as a disincentive for giving inducements to spouses, according to Jason Brown, an attorney with Fisher & Phillips in San Francisco. The ACA doesn’t require apportioning the incentive between the employee and his or her spouse, Brown noted.
In its comments, SHRM asked, “If the EEOC’s main objective is to protect health and genetic information, how can it be, that offering an employee an inducement of more than 30 percent the employer’s self-only plan would automatically render that employee’s participation in an employer’s wellness plan ‘involuntary’ under one statute, but offering the employee’s spouse that very same inducement would not violate the other?”
SHRM called the apportionment scheme “contrary to the ACA” and predicted it “will require employers to offer employees and their spouses’ anomalous and nonsensical inducements for their participation in employer-sponsored wellness programs.”
SHRM also took issue with the proposed rule’s requirement that in-kind incentives be counted toward the incentive cap.
A SHRM 2015 wellness survey indicated that reductions in health care premiums were the most prevalent wellness incentive, followed by such in-kind incentives as gift cards, T-shirts, gym bags, time off from work, and internal recognition in the company newsletter or on the company intranet site.
“Any requirement to value and track nonfinancial incentives will increase the administrative burdens associated with wellness programs,” SHRM wrote. “Faced with this increased burden, many employers will decide that they can no longer hand out incidental nonfinancial incentives such as T-shirts and gift cards to help motivate and foster participation in their wellness programs,” it added. Companies will then cease offering paid time off to wellness participants, SHRM predicted. They also will eliminate small tokens aimed at generating enthusiasm “rather than deal with the complexity of quantifying and tracking these items, especially under the apportionment regime outlined in the proposed rule.”
Brown said that in California, in-kind incentives already are discouraged because they are defined as compensation. “Even a Starbucks gift card or a yoga gift certificate could be considered wages and mess up the overtime calculation,” he said. Extra paid time off is more common as an inducement in California, he noted.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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