EEOC Issues: Impact of the 30% penalty, worksites and persons with obesity, intrusiveness and wearables

June 24th, 2015 by MorganDowney Leave a reply »

Additional problems with the proposed EEOC regulation include how severe the impact of the penalty provisions can be, the hostility of workplaces to persons with obesity, including the wage penalty. Additional concerns include the use of wearable monitoring technology in employer wellness programs and deficiencies in the Notice requirements.

Impact of a 30% Penalty

The price of this program to workers is worth considering. The 30% penalty involves both the share of the health insurance premium paid by the employer and the share paid by the employee. In effect, the employer is clawing-back what the employee has already paid as their share plus a 30% surtax. This scheme may continue in the law indefinitely and the employee would pay every year. But how much of a difference does it make?

Federal Reserve Board published Report on the Economic Well-being of U.S. Households in 2013 in July 2014. The report found that 47% of respondents say that they either could not cover an emergency expense costing $400 or would cover it by selling something or borrowing the money. 31% of respondents report going without some form of medical care in the 12 months before the survey because they could not afford it. 43% of respondents with a household income under $40,000 report they would have to sell some asset or borrow money to meet a $400 emergency expense. The EEOC propose threshold is over 400% greater and will increase over time, further reducing the available household income for emergencies, health care, housing, retirement and education purposes.

Employees are also reeling from employers only offering high-deductible plans which require employees to cover out-of-pocket expenses of $6,450 for a single plan to $12,900 for family coverage before the insurance plan will cover any expenses (Bernard TS, High Health Plan Deductibles Weigh Down More Employees, New York Times,Sept. 2, 20014)

These increases come amid a bleak economic picture for millions of Americans since the Great Recession. According to an article in the New York Times, the economic picture is even more bleak now for the poor and low-income workers than it was in 2007. The poverty rate is above pre-recession levels. The number of people receiving food stamps soared from 26.3 million in 2007 to 47.6 million in 2013. Median household income is some $4,500 lower now than before the recession. (Dewan S, Schwartz ND, Parlapiano A, How the Recession Reshaped the Economy, New York Times, June 15, 2014, p,6-7)

So it is not surprising that more Americans are finding meeting basic medical care is a hardship (up to 46% from 36% in 2013), out of pocket expenses have gone up a lot (33%) (Rosenthal E, How the High Cost of Medical Care is Affecting Americans, New York Times, Dec. 12, 2014, p.30)

The result is that many have gone without medical treatment or have not filled a prescription. (CBS News, Do Americans think their health care costs are affordable? Dec. 18, 2014)

The Workplace is Generally Hostile to Overweight, Obese Americans

Multiple studies in the United States and Europe show a negative and statistically significant effect of obesity on earnings and employment. Aberett SL, Obesity and labor market outcomes, IZA World of Labor, 2014:32)

An obesity “wage penalty” has been described affecting young men. (Lundborg P, Nystedt R, Rooth DO, Body Size, skills and income: evidence from 150,000 teenage siblings, Demography 2014 Oct;51)5:1573-96) and, particularly, overweight and obese white women (Han E, Norton EC, Stearns SC, Weight and wages: fat versus lean paychecks, Health Econ 2009 May; 18(5):535-48. See also, Downey, M, The wage penalty and obesity, Downey Obesity Report, Feb. 7, 2013.

The EEOC Proposed regulation’s Notice requirements are flawed.

The EEOC proposed regulation proposes that employers must clearly explain the information to be obtained from a health risk assessment, how such information will be used, who will receive the information, restrictions on disclosure and methods used to prevent improper disclosure of medical information.

However, the EEOC proposed regulation omits from the notice requirement the most important elements of the joint HHS, Labor and Treasury regulations requiring access to reasonable alternatives to the wellness program, leaving the final decision in the hands of the employee’s physician. (See Downey Obesity Report, May 30, 2013.)

According to the Department of Labor, the employee’s physician who proposes non-mandatory weight reduction program, the employer must provide it, (FAQ, January 9, 2014).