While most of us were buying supplies for partying down on New Years Eve (in my case, I was in charge of bringing broccoli and Boggle), the federal court in the Western District of Wisconsin quietly handed down an earth-shattering decision in the Flambeau case, which pretty much went unnoticed due to the timing. You may recall that this was the case where employees refusing wellness lost all insurance benefits. The case looked like a layup win for the EEOC. After all, the Affordable Care Act clearly states that penalties for non-smokers are capped at 30%, and this was 100%.
But here’s the rub: Flambeau conditioned the entire insurance benefit on participation in their “pry, poke and prod” program. They knew most employees hate “pry, poke and prod” programs to begin with. So they created a program so onerous that some number of employees would prefer to forego insurance altogether than participate in wellness. And indeed, that’s what happened at Flambeau. This decision means they’re getting away with it, saving thousands of dollars apiece for each employee who refused to submit.
Make sure you catch that distinction between the 30% penalties and the 100% penalties:
(1) It is not OK to penalize an employee more than 30% for refusing to submit to a “pry, poke and prod” program if they already have insurance, or they can get insurance through the employer without this requirement.
(2) However, it is OK to say: “There is no incentive or penalty for wellness once you have insurance, but you can’t have insurance at all unless you submit.” If that seems like an artificial distinction, well, that’s because it is. All an employer has to do is require pry-poke-and-prod before you get insurance.
Assuming other federal courts follow this district’s lead (as they usually do), employers create a 100% de facto non-participation penalty: If you don’t participate, you don’t get insurance, period.
The implications of this case:
(1) It will allow some vendors, like Bravo, to double down on bragging about the “savings” from wellness by creating programs that employees don’t like;
(2) Because the decision only applies to participatory programs and not outcomes-based programs, many companies will either not switch to outcomes-based programs or else maybe switch back.
It also puts pressure on the EEOC to put the kibosh on this end-run around the ACA’s wellness provision. Note that the decision can and should be appealed. Otherwise it is a de facto repeal of a big chunk of the Affordable Care Act.
The bottom line is, now there is universal agreement (albeit inadvertently in the case of HERO, which apparently didn’t mean to tell the truth, but failed to proofread their own document) that wellness loses money. So any pretense of “pry, poke and prod” being about the employee is gone. Obviously, forced wellness isn’t about trying to save the $0.99 PMPM (that’s before program fees!) that HERO Says can be saved with healthier employees. It’s about gutting the key ACA requirement that employers provide insurance.
And unless the EEOC steps up in its final regulations and/or prevails on appeal of Flambeau, they will have succeeded.