Companies Can Fine You for High Cholesterol, Smoking

By Chris Hoenig


Honeywell, the company that makes everything from home thermostats to astronaut life-support systems, can go forward with a program that penalizes employees who refuse wellness screenings, though the program itself may be on life support.

The Equal Employment Opportunity Commission (EEOC) filed a lawsuit looking to block Honeywell from instituting incentives and fines for its corporate wellness program. The EEOC argued that fines for non-participation violate the Americans With Disabilities Act, by forcing medical examinations that are not job-related, as well as a 2008 federal statute that prohibits discrimination based on genetic information.

Honeywell’s program measures height, weight and waist size to determine an employee’s Body Mass Index (BMI), and includes a blood-pressure reading and blood sample that is tested for cholesterol, blood sugar and nicotine levels.

If the nicotine tests show that an individual is a smoker, the employee has to pay a $1,000 surcharge on his or her healthcare coverage. Failure to submit to the test automatically triggers the surcharge, as Honeywell uses the refusal to conclude that the employee is a smoker. If a spouse is covered by the employee’s insurance plan and does not submit a sample, an additional $1,000 surcharge is assessed.

In addition, any employees who refuse the biomedical screening are hit with a $500 surcharge on their 2015 insurance costs.

As further incentive, Honeywell offers contributions ranging from $250 to $1,500 to employee health-savings accounts to those who do undergo the screenings.

“Honeywell’s medical examinations are unlawful,” the EEOC said in its complaint, adding that the company “cannot do what the law says it cannot dofine its employees who do not want to voluntarily submit to its medical testing.”

In court, EEOC lawyers argued that the program is not the problem, but the penalties are.

“We are not seeking to stop testing and not seeking to stop the assessment of the smoking surcharge,” EEOC attorney Laurie Vasicheck told the judge. “What they can’t do is penalize employees who do not want to go through it.”

Honeywell’s attorneys said the program is in full federal compliance, and is authorized by multiple laws, including the Affordable Care Act.

“The incentives we provide are specifically sanctioned by two separate federal statutes,” the company said. “We don’t believe it’s fair to the employees who do work to lead healthier lifestyles to subsidize the healthcare premiums for those who do not.”

U.S. District Judge Ann Montgomery, hearing the case at the federal courthouse in Minneapolis, said she will allow the program to continue while she considers the arguments.

“What is better public policy and who is likely to succeed are not measures this court is prepared to decide,” Montgomery told the lawyers. “There are a number of fascinating issues for debate at a later time.”

Montgomery told the lawyers that she believes Honeywell will have an easier time refunding penalties if she rules against them than trying to charge penalties if she sides with them.

Honeywell is a self-insurer, meaning it funds its own insurance plan instead of paying premiums to an insurance company. It’s a common practice that covers about one-third of the 150 million Americans on private, employment-based healthcare plans across the country.

Company lawyers said 77 percent of employees took part in the screenings last year, when they were completely voluntary and no penalties were applied. So far this year, about 30,000 employeesabout 55 percent of the company’s workforcehave been screened.

The company also offers a program that provides a $500 health-savings-plan incentive for employees who receive extra advice and opinions about eight common, but expensive, health procedures, including lower-back surgery, heart-bypass surgery, hip and knee replacements, and hysterectomies and mastectomies. Honeywell says the incentive exists because there are usually alternatives to these procedures, but doctors rarely inform their patients about them, and the company just wants their employees to be fully informed.

A Kaiser Family Foundation survey found that 80 percent of American workers support wellness programs, but 62 percent object to penalties for not participating. Kaiser has also found that 51 percent of companies with 200-plus employees offer some form of health screening, but just 8 percent involve an incentive or penalty, which can create a gray area legally.

“The EEOC has never provided firm guidance on what ‘voluntary’ means,” said John Barlament, an employee benefits lawyer with Quarles & Brady in Milwaukee.”They’ve never given us an exact dollar amount of cash compensation or anything else.”

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