handing off coins

Photo credit: Austrian economics. Liberty-me.

Starting this month the D.C. Circuit Court nullified the current Equal Employment Opportunity Commission’s (EEOC) rules relating to the use of financial incentives associated with health examinations or providing answers to disability-related health questions in wellness programs. Much has been written about Judge John Bate’s decision, the uncertainty that the ruling creates and how employers might, or might not, redesign their wellness programs in the coming year. Most of the attention has been paid to whether a 30% insurance premium differential can be construed as fair and evokes voluntary behavior change or whether that amount of money is a coercive cudgel. It’s an important question that should take into account the meaningful differences between lower-paid compared to higher-paid employees. But confining the debate about voluntariness in wellness to economic inequities will miss the larger issues relating to social determinants of health. Organizational culture and social context matter when it comes to experiencing something as a reward versus an inducement. This editorial proposes a definition for voluntariness in wellness that considers economics but is also sensitive to broader organizational and experiential contexts.

For the full, open access, version of this editorial including references, go to the American Journal of Health Promotion: “On Voluntariness in Wellness”.

When a Reward becomes an Inducement

What’s not to like about rewards? Merriam Webster describes a reward as “something that is given in return for good or… that is offered or given for some service or attainment.” Sounds easy: I do something nice, I get a prize! Webster also see rewards as a way “to give money or another kind of payment to (someone or something) for something good that has been done.” If my employer is into offering me rewards in the form of money for taking care of myself, the synonyms I’d associate with my company are “bounty, honor, gift, or accolade”. Sign me up! Given how early I get up to go rowing, often on very cold mornings, who could possibly object to my getting accolades for that?

Well, actually, depending on how you organize incentives, it could be a lot of people. Namely those who aren’t feeling the love which, if more incentives are based on completing exams proving the attainment of health outcomes, could mean many more of us. The two lawsuits brought by employees in the early aughts claimed that using incentives to induce participation in exams was discriminatory. Around that time I argued for “progress based incentives” as a way to find common ground between those cheering on more employee accountability and those booing about the unfairness of incentives. But the regulations were not written to accommodate a nuanced approach to incentives and in 2016 the AARP, on behalf of all of its members, sued the EEOC arguing that the 30% insurance differential relating to participation in health exams and/or answering disability related questions was “arbitrary and capricious”.

There must be a coy analyst working the delineations desk at Webster because their definition also notes that inducements are occasionally a bit menacing.

It impressed me as ironic that the EEOC, rather than an employer, would be on the receiving end of a momentous discrimination complaint given, at their core, the EEOC was built to protect employees. Indeed, unlike the wording of the ACA program requirements and their consistent reference to incentives as rewards, the EEOC’s final rules about incentives, in the context of compliance with GINA rules, consistently speaks of inducements. To my ear, inducements connote coercion and Webster seems to agree but just somewhat. Inducement, when used as a transitive verb, is “to move by persuasion or influence”. That’s a benign enough meaning for most, I suppose, but there must be a coy analyst working the delineations desk at Webster because their definition also notes that inducements are “occasionally a bit menacing, like the Godfather’s offer that you can’t refuse.” If my employer is offering me inducements in the form of money to disclose health information, the synonyms I’d associate with my company are “persuade, entice, bribe, lure, and bait”. Sign me up? Given how early I get up to go rowing, often on very cold mornings, perhaps I do need a bribe to prove I’m enjoying more benefits than harms!

When metrics show that the employer has created an environment conducive to attaining health goals, only then can the use of incentives be considered to have met a voluntariness standard.

It appears it may fall back to Congress rather than the EEOC to define voluntariness in wellness. If so, I hope they take a broader, more “organizational health contingent” approach which has not been evident so far in the regulatory arena. Where health contingent approaches connect earning incentives to an individual showing they attained a clinical measure, an organizationally contingent approach would make the use of incentives also contingent on whether the organization can show that the incentives are a part of a “reasonably designed wellness program”. That is, when measures such as “perceived organizational support” or “culture audits” show that the employer has created an environment conducive to attaining health goals, then the use of incentives will be considered to have met a “voluntariness standard”. I offer here some language and conditions for consideration.

Organizationally Contingent Use of Incentives: Employers can satisfy a “voluntariness standard” in their use of financial incentives in wellness programs when the incentive amount is consistent with ACA/EEOC regulations and the wellness program is “reasonably designed.” That is when employees are offered choices for earning incentives that are aligned with the values, needs, and priorities of employees; when use of incentives are well integrated into a measurably robust, organizational culture that visibly values health; when the design of the program is well-informed by a diversity of opinions and views and when all employees are well versed in the meaning of, and opportunities for, reasonable alternatives for earning an incentive.

The conditions, and metrics, employers would consider in determining whether they fall within the above voluntariness standard include:

  1. My wellness program is “reasonably designed”. This means that my program has a reasonable chance of positively improving the health of my population because it is based on best practices in health promotion. This includes offering a comprehensive approach in which the use of incentives is but a minor tactic within broader cultural and individual support strategies.
  2. The financial incentive is clearly framed as a positive opportunity and an act of support for health. A reasonable person would not argue it is intended as punitive but would conclude “I have choices that I agree are in my best interests.”
  3. The choices I am given are aligned with my values, needs, and priorities as measured by a perceived organizational support scale.
  4. The choices I am offered are realistic for me to achieve given the context of my living conditions (my wage, commute, neighborhood, family living conditions).
  5. The design of the wellness program and the related incentive program is well-informed by a diversity of opinions and views.
  6. The choices I am offered are sensitive to my age, gender, ethnicity, and other personal and demographic influences on lifestyle practices.
  7. The culture of health in my organization is visibly aligned with the intent of the incentive. The incentive reinforces health improvement as does the culture as measured by a culture audit.
  8. I am thoroughly educated about my opportunity to come up with reasonable alternatives to earning the financial incentives. Education about reasonable alternatives makes it clear that if the choices I am offered are not of interest to me, I am still encouraged to participate by identifying a healthy alternative that is of interest to me.
  9. Reasonable alternatives to achieving financial incentives include physical, social, mental, and emotional health improvement opportunities.
  10. The size of the financial incentive motivates me but is not so large that I perceive it to be coercive.

Intended and Unintended Consequences from Organizationally Contingent Incentives

Based on surveys that show very few organizations offer comprehensive, best practices approaches to employee wellness programming, if Congress were to enact organizationally contingent approaches to the use of financial incentives, it would likely mean fewer organizations would use incentives. A more hopeful view, however, would be that more organizations would better balance the use of incentives with efforts to build a culture of health in which incentives are more likely to be effective. In the full version of this editorial, I review the possible unintended consequences of the above approach with Jim Pshock, the Founder and CEO of Bravo Wellness. Spoiler alert: here’s one of many quotes from Jim: “I don’t support suggesting that there is a specific culture that must be established before an incentive can be offered.” Furthermore, says Pshock, “There are currently no legal or regulatory concerns with incentives for the completion of program elements that don’t require exams or answering sensitive questions and I’d hate to suggest that incentives for other program elements should be restricted as well.” Which brings us back to one of Judge John Bates’ regulatory concerns that the EEOC needs to go back to the drawing board in defending their position that a percentage of an employee’s health care costs is equitable for all workers.

Bates infers that a 30 percent insurance premium differential is a regressive tax when he writes that such a differential is the same as “several months’ worth of food for the average family, two months of child care in most state, and roughly two months’ rent.” Though Bates puts the onus of the answer to the question of voluntariness on the issue of financial fairness, I would suggest that his featuring the plight of the ‘average family’ has as much to do with broader social determinants of health. Should the use of incentives take into account an individual’s wherewithal to participate in wellness relative to their other life’s demands? And that brings me back to the merits of organizational health contingent incentives. I’m hopeful Congress considers organizational contingencies in the use of incentives as a way to fairly balance the needs of the employer with the needs, values, and interests of the employee.

For the full, open access, version of this editorial including references, go to the American Journal of Health Promotion: “On Voluntariness in Wellness”.


Paul E. Terry, Ph.D. is Editor in Chief of the American Journal of Health Promotion and a Senior Fellow at the Health Enhancement Research Organization (HERO).

If you are interested in learning more about the EEOC and ADA wellness provisions policy changes and related issues in 2019, contact Emily Wolfe, HERO’s Manager of Committees, to join HERO’s Policy Committee. This committee is currently working on a consensus paper relating to voluntariness in worksite wellness programs.

©2024 Health Enhancement Research Organization ‘HERO’


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