Despite the view of employers that compliance with HIPAA and PPACA should be sufficient to constitute a “legal” program, the proposed EEOC regulations, contend that many of the provisions that would be in compliance PPACA and HIPPA still violate the ADA and GINA. Protecting employees from inappropriate practices is an important function of the EEOC. However, in this case, some of the positions that the EEOC is taking in their proposed regulations will actually end up hurting the very employees they are seeking to protect:

1. If the EEOC makes it too risky or difficult to implement incentive and reward programs, employers are likely to simply drop them. According to a 2015 study from the National Business Group on Health and Fidelity Benefits, the average jumbo employer spent $878 per employee on heath incentives. The proposed regulations would deprive them of the opportunity to earn these incentives. In fact, at its extreme, if employers feel that removing this valuable tool will make it too difficult to drive down costs, some employers may get out of the business of providing health care at all.

2. The EEOC has proposed that the 30 percent limit on the amount of incentives, which under PPACA applies only to health-contingent or “outcomes” programs, would apply to all programs including participatory programs. If this was the case, it is likely that employers will shift their incentive dollars to outcomes programs and away from programs based on only participation.

This will make it harder for employees to earn incentives as they will be required to achieve more outcomes and less will be available for basic participation.

3. The EEOC has proposed that the limit of 50 percent of premium as provided under PPACA would only be available if smoking status is not verified by an actual test. This has the potential to deprive many non-smokers of incentive dollars.

In fact, many companies have been using, and employees have been participating in, biometric and other testing to verify smoking status for many years now. For those employees participating in those tests, they would be deprived of incentives they are earning today.

4. The EEOC has proposed that the calculation of permitted incentive dollars be based on the premium of just the employee and not of the employee and other family members as provided under PPACA. This will likely cause employers to reduce or eliminate incentives for spouses and family members and thus deprive the families of employees the opportunity to earn additional dollars.

These amounts can be significant. According to a 2015 study from the National Business Group on Health and Fidelity Benefits, 54 percent of employers indicated their program will include spouses and domestic partners in 2015 and the average incentive value per spouse/domestic partner has grown to $628 in 2015 from $530 in 2014 (and from $420 in 2010) and to $894 in 2015 for jumbo (over 20,000 employees) employers.

5. Finally, the EEOC has proposed counting non-cash incentives such as days off, prizes and other “in-kind” incentives in the calculation of the allowable incentive amount. Today, employers have had these types of ancillary incentives in place in addition to the incentives available under HIPPA and PPACA. Employers view these types of incentives as valuable additions that can have a meaningful impact not only on participation rates but on the ability to create a “wellness culture.”

In addition, these types of in-kind incentives are very difficult to track and requiring employers to do so would place an administrative burden on them. This would likely have the effect of employers eliminating or reducing these valuable additional incentive programs and techniques.

The EEOC is trying to strike a delicate balance between protecting the rights of employees and affording employers the opportunity to take advantage of incentive programs. While there are many PPACA provisions that employers were concerned about, the increase in the use of incentives was one in which there was widespread agreement. As a result, with the passage of PPACA, employers have been embarking on multi-year strategies to engage employees, spouses, dependents and domestic partners with incentives. Not only will some of the EEOC’s proposed regulations hurt employers’ ability to rein in costs, but in fact the EEOC may be hurting the very employees they are trying to protect.