In April, the insurance company Aetna announced that it would pay their employees to sleep.  Specifically, for every 20 consecutive nights that workers sleep 7 or more hours, workers are paid $25, up to $300 per year.

As part of Aetna’s broader initiative to combat sleep deprivation – inspired by the CEO’s personal exposure with several near-death experiences – the press has championed Aetna’s policy and CEO.  Arianna Huffington commented, “It really changes the cultural delusion that most businesses have been operating under, which has been … the more exhausted and burned out the employees are, the more productive they are.”

Aetna’s policy addresses some obvious concerns.   But it’s far from perfect.

An “insomnia tax”? Potential legal issues

In discussing any employee wellness incentive, issues of privacy and discrimination are key concerns.  Specifically, wellness programs have the potential to not only reveal information about employees’ health conditions but also disadvantage employees.  In Aetna’s case, workers with chronic illnesses may not be able to get enough sleep in order to meet the program requirements.

While HIPAA does preclude disability-related inquiries by employers, it did include “an exception for programs of health promotion and disease prevention.”  The ADA carves out a similar exception for “voluntary medical examinations, including voluntary medical histories, which are part of an employee health program” as long as employees are neither required to nor penalized for not participating, because employees might then feel coerced to reveal their medical histories.

However, what qualifies as a penalty is unclear – although recent case law seems to give employers significant latitude.  For instance, in EEOC v. Honeywell International (2014), Honeywell employees who did not participate in a company wellness program were not eligible for the company-sponsored health savings account and had to pay a $500 surcharge.  The judge rejected the EEOC’s motion for a preliminary injunction because the ADA allows for an incentive to be “the absence of a surcharge.”

In response, the EEOC proposed a rule in April 2015 that seeks to cap the size of employer health program incentives at 30% of the total plan cost to prevent financial coercion.  But even so, as Kristin Madison pointed out on Health Affairs, that 30% cap could allow some employers to offer free premiums to employees if they consented to a wellness plan.

With only $300 on the hook, Aetna’s sleep program is likely not coercive.  However, to protect against discrimination, the ACA also requires employee wellness programs to be:

“Reasonably designed to be available to all similarly situated individuals.  Reasonable alternative means of qualifying for the reward would have to be offered to individuals whose medical conditions make it unreasonably difficult, or for whom it is medically inadvisable, to meet the specified health-related standard. . . . Individuals must be given notice of the opportunity to qualify for the same reward through other means.”

Although Aetna will allow employees to manually tally their own hours because of privacy concerns associated with wearables, at the moment I know of no reasonable alternative it will offer for people with chronic diseases.

Not more healthy, but more wealthy: implementation problems

Even if Aetna’s sleep program does comply with legal regulations, the program seems to be more of a public relations tactic than the substantial shift in work culture claimed.  In its roundup of workplace wellness programs, the WSJ points out that “companies can waste money on programs that won’t effectively address workers’ biggest health problems.”  This criticism might also apply to Aetna’s sleep program.

First, getting seven hours of sleep will remain systematically harder for some groups of people that are not covered under the HIPAA, ACA or ADA guidelines, such as new parents and older people.  In a statement to Slate, Aetna clarified that the sleep did not need to be continuous in order to count towards the incentive.  Yet, it’s unclear how people would manage to find more time in their day to sleep absent a corresponding shift in workload.  Moreover, Slate, however, noted the manual entering of sleep time mentioned earlier could allow for falsification of hours.  If promotion and bonuses are based on relative performance, it seems likely that people could simply lie about how much they slept, and use one of those “seven hours of sleep” to work some more.  At its worst, this could stress workers further and create the perverse incentive to lie to one’s employer.  To that end, Aetna’s incentive program may not effectively address sleep deprivation.

Second, the funds for this sleep program might be better allocated towards effective incentives that have been empirically tested, such as the expansion of Aetna’s metabolic program, which has been shown to curb health costs and disease risk using diet and exercise coaching.  While Aetna has attempted to connect sleep levels to employee productivity, it hasn’t shown this empirically yet – the study statistic it uses to cite sleep’s effect on productivity appears to be from a second wellness program that included sleep as a component.  That is, it’s possible that the increase in employee productivity could have largely been driven by other components of the program, such as yoga and meditation.  Moreover, this second wellness program appears to be less cost-effective than the metabolic program described above.

While being paid to sleep is a great start, comprehensive rest and wellness for workers is still probably a dream.