by Rebecca Greenfield, January 15, 2016
Photographer: Hubert Camille/Roger Wright via Getty Images
Arnold, who worked for Wisconsin plastics maker Flambeau, chose not
to take his work-sponsored health assessment and biometric screening.
The company responded by pulling his insurance coverage.
many employers, Flambeau uses a wellness program to cut insurance costs
by encouraging healthy employee habits. In the past, submitting
to on-site tests of blood pressure, body-mass, and cholesterol meant
saving a few hundred dollars. Now companies such as Flambeau have gone a
step farther, denying healthcare entirely to those who don't
participate. People like Arnold must instead pay for more
expensive coverage through the government's COBRA program.
According to several federal courts—including one that ruled in favor of Flambeau—this is all perfectly legal.
a case filed by the Equal Employment Opportunity Commission, the U.S.
government argued that Flambeau's wellness program didn't comply with
the Americans with Disabilities Act, which limits companies from
requiring medical exams or personal health information from workers.
Denying employer-sponsored coverage crosses the line from voluntary to
coercive, the EEOC contended.
Not so, said a federal judge in
Madison, Wisc., who ruled on Dec. 31 that employers can deny coverage
without violating the ADA as long as the data gleaned from the wellness
program is used for purposes of overall health coverage.
this case, the screenings helped Flambeau determine the risk of its
insurance pool. The EEOC says it is reviewing the decision. Samuel
Bagenstos, a professor at the University of Michigan, claims the
ruling turns "voluntariness" on its head.
"It would make it all
but impossible to enforce the voluntariness requirement for requests for
medical information," Bagenstos said. "In that sense it's probably the
wrong reading of the statute."
Over the last few years, wellness programs have become a popular way for companies to try to curb rising health-care costs. Employers spent a record $693 per employee on such initiatives last year, up from $430 the previous year, according to data from
Fidelity Investments. Wellness programs, an umbrella term for
employer-supported initiatives to improve and promote employee health,
were one of the most popular "benefits" last year, with three quarters
of organizations surveyed by the Society for Human Resource Management offering some sort of program.
have been claimed. Companies that require health care surcharges for
smokers, for example, say employees subsequently cut tobacco use, a
recent SHRM survey found. Yet, despite the popularity of wellness
programs among employers, their efficacy is unclear. Participation rates hovered at 24 percent in 2014, according to Gallup research
which concluded that, when employees don't engage, the programs
definitely don't work. Moreover, such programs tend to see results only
over the long term. Researchers in a seven-year study at PepsiCo found that participation was associated with lower health-care costs, but only after the third year.
spur workers to buy into wellness and all its health benefits (and
savings for the company), it's common for employers to offer a reward of
money toward health insurance premiums. In the Flambeau case, the
company wasn't seeing results, so it upped the ante from a $600 credit to threatening a health insurance cutoff.
Alfred Di Tullio, a lawyer for Flambeau, praised the court ruling,
saying that "from the get go they always felt this program wasn't
Employees have been getting roughed up in this nascent fight. The Flambeau decision was their second defeat after suing employers who got creative in pushing wellness programs. In 2012, a federal appeals court in Atlanta found
in favor of an employer, using the same reasoning about the ADA to
affirm a lower court ruling. In response to the confusion, the EEOC last
spring put out proposed guidelines, drawing hundreds
of critical comments from all sides. Under the new guidelines, the
maximum penalty an employer can impose on non-participating workers is
30 percent of the total cost of employee-only coverage.
seeing a real tension to basically incent people to live healthier lives
so that they can use insurance less, and lose less days at work, and be
more productive," said Paul Secunda, a professor of law at Marquette
University, who specializes in labor and benefits law. "On the other
hand there's the medical privacy concerns of individuals."
Secunda agreed with Bagenstos that the reasoning in the federal cases "is wrong.''
on all sides expect more legal activity. The EEOC has two other
lawsuits pending that challenge employer programs. Its new guidelines,
which take effect next month, are also likely to trigger
additional court fights.
"Employers will have to wait and see
what happens," said Steve Wojcik, vice president of public policy at the
National Business Group on Health, a nonprofit that represents large
employers. "I think the bigger picture for this is that the EEOC should
clarify through the regulatory process what it means.''