While most of us were buying supplies for partying on New Year’s 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 went pretty much unnoticed due to the timing. You may recall this was the case where employees refusing wellness lost all insurance benefits. The case looked like it would be a layup win for the Equal Employment Opportunity Commission (EEOC). After all, the Affordable Care Act (ACA) clearly states that penalties for non-smokers are capped at 30%, and this penalty was 100%.
But, here’s the rub: Flambeau conditioned the entire insurance benefit on participation in its “pry, poke and prod” program. The company 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 rather than participate in wellness. And, indeed, that’s what happened at Flambeau. This decision means the company is getting away with it, saving thousands of dollars 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, such as Bravo, to double down on bragging about the “savings” from wellness by creating programs 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.
The court’s decision also puts pressure on the EEOC to put the kibosh on this end-run around the Affordable Care Act’s wellness provision. 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 that there is now 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. 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 (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 or prevails on appeal of Flambeau, the opponents of ACA will have succeeded.