Whose side is the Equal Employment Opportunity Commission (EEOC) on anyway? 

Right now, it appears as though the agency’s playing by itself against both the Obama Administration and large employers.

The EEOC’s recent crusade against employer wellness programs it deems “involuntary,” could ultimately end up costing President Obama some much-needed support for his signature health law.

The agency recently filed three lawsuits against different employers, claiming their wellness programs are illegal. In all three suits, the EEOC says the employers’ penalties for non-program participation are so steep that they render the programs “involuntary.”

The EEOC also alleges that the programs all subject employees to health-related inquiries that are not job-related and consistent with business necessity — which is only legal under the umbrella of a “voluntary” wellness program.

These lawsuits have upset employers for two reasons:

  1. The EEOC hasn’t released any guidance on what, specifically, makes a program “voluntary” or “involuntary” — so employers are left to guess, and
  2. The Affordable Care Act has provisions encouraging the very kind of wellness program incentives that appear to have sparked the ire of the EEOC.

Obamacare’s wellness provisions

Prior to the passage of the landmark healthcare reform law, an employer that wanted to offer wellness program participants a reward for their participation — or for achieving a health goal — could only issue rewards valued at no more than 20% of the cost of individual-only coverage under its health plan.

The same rule applied to penalties: A penalty for failing to participate — or for failing to achieve a health goal — couldn’t exceed 20% of the cost of an individual premium.

But under Obamacare, the cap placed on the value of rewards and penalties was bumped to 30% of the cost of a plan’s individual premium. The idea behind the limit increase was to allow employers to offer bigger financial incentives in an attempt to get more employees to participate in wellness programs.

In addition, Obamacare allows wellness initiatives designed to prevent or reduce tobacco use to be worth up to 50% of the cost of individual coverage.

So, according to Obamacare, an employer could throw thousands of dollars in incentives or penalties at employees based on their level of wellness program participation. But, according to the EEOC, doing so could trigger a lawsuit.

Businesses threaten to pull support

The juxtaposition is making employers’ blood boil, so much so that the Business Roundtable, a group of chief executives of more than 200 large U.S. corporations, is planning to meet with Obama on the issue, according to a report by Reuters.

There have been rumblings that as a result of the EEOC’s recent actions against wellness programs, large employers might pull their support of the health law and realign with its opponents.

This would be a big blow to the Obama Administration, as large employers were some of the few entities to back the law. But they did so primarily because of its wellness provisions.

Maria Ghazal, vice-president and counsel at the Business Roundtable, told Reuters:

“The fact that the EEOC sued is shocking to our members.”

“They don’t understand why a plan in compliance with the ACA (Affordable Care Act) is the target of a lawsuit.”

“This is a major issue to our members.”

Why does it matter?

It’s possible turning large employers from supports into opponents could have a big effect on the law’s implementation.

Republicans in Congress are just a few votes shy of overriding a presidential veto, and it’s clear they want to change the law.

In addition, more Democrats are beginning to criticize the Obama Administration for its handling of the law.

As a result, all big business has to do is sway a few Democrats over to the other side of the aisle for Obamacare to undergo some significant changes.

We’ll keep you posted as this plays out.

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