NOT SO
FAST:
Thinking Twice Before Imposing Health Insurance Surcharges on Unvaccinated Employees By C HRIS CAVALIERE and HALEY KOLE
Is
your company considering imposing higher health insurance premiums on employees who have not received the COVID-19 vaccine? If so, be careful! Although some employers have been imposing health plan surcharges on smokers for years, it is not safe to assume that the same rules apply to surcharges placed on unvaccinated employees. Before imposing a health plan surcharge on your unvaccinated employees, there are a multitude of legal requirements to consider. To make matters worse, these requirements are not very clear, and there is currently very little governmental guidance to assist you. So, with that being said, what are some of the major things you should consider before imposing a health plan surcharge on your unvaccinated employees? The “HIPAA” potamus in the Room: Complying with Wellness Program Requirements Imposing a health insurance surcharge on unvaccinated employees likely creates a group health plan wellness program that must comply with a multitude of requirements. Under HIPAA’s rules, these requirements depend on whether the program is a “participatory program” or a “health-contingent program.” Participatory programs are those that do not require any conditions for receiving an award (other than participation). Participatory programs have very few requirements associated with them, except that they must be available to all similarly situated individuals. Healthcontingent programs, on the other hand, are those that base rewards on completing an activity related to a health factor. If things were not complicated enough, healthcontingent programs are further subdivided into (i) activity-only programs, and (ii) outcome-based programs. At present, there is no clear guidance on whether a surcharge on unvaccinated employees is considered a participatory wellness program or a health-contingent wellness program. However, many experts agree that it might be safer to classify such a surcharge as a health-contingent “activity-only” wellness program and to comply with the requirements associated with health-contingent “activity-only” programs. If an employer’s vaccine-related surcharge is determined to be a health-contingent wellness program and it does not meet the applicable requirements, the employer can be fined up to $100 per day per participant. In general, health-contingent “activity-only” wellness programs must comply with the following requirements: 32
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• Participants must be able to qualify for the award at least once per year. • Employers must provide employees with notice describing the program. • If an employee is unable to receive the vaccine due to medical constraints, a reasonable accommodation must be provided. • The wellness program must be uniformly available to all similarly situated employees. • The wellness program must be reasonably designed to promote health or prevent disease and cannot be a subterfuge for discrimination. • The amount of the incentive cannot exceed 30% of the total cost of coverage under the plan (this limit is increased to 50% if the wellness program includes a tobacco cessation component). This incentive would need to be combined with any other “health-contingent” wellness program offered under the plan when determining whether the award exceeds the limit. Family Matters: Being Careful about Family Members In general, the Genetic Information Non-Discrimination Act (“GINA”) does not prevent employers from incentivizing employees to get vaccinated. This is because the employer is only requesting proof of vaccination and not requesting prohibited genetic information. However, things get more complicated when the vaccine is administered directly by the employer or by the employer’s agent (as opposed to
