On October 4, 2021, the US Departments of Labor, Treasury, and Health and Human Services issued guidance regarding the application of the Health Insurance Portability and Accountability Act (HIPAA) wellness rules to vaccine-related premium surcharges and discounts, clarifying that employers may charge vaccine premium incentives if they adhere to the requirements of activity-only health-contingent programs.
Employers have grown more interested in exploring incentives designed to increase COVID-19 vaccination rates among employees. Some employers have announced plans to charge unvaccinated employees higher contributions for health coverage than vaccinated employees, while some have been considering other options, such as excluding coverage for COVID-related illnesses, charging higher cost-sharing for COVID-19-related illnesses and offering more generous plan options to employees who are vaccinated.
Many plan administrators expressed bewilderment at the Biden administration’s recent guidance to limit vaccine incentive or surcharge programs for unvaccinated plan participants. According to this SHRM article, which features insight from McDermott Partner Judith Wethall, any premium surcharges must comply with the Health Insurance Portability and Accountability Act’s (HIPPA) nondiscrimination rules. HIPPA nondiscrimination rules allow for participatory and health-contingent permissible wellness programs.
An August Willis Towers Watson poll found that 52% of 961 surveyed companies intend to implement at least one vaccine mandate by 2021’s fourth quarter. In a poll in May, 72% of respondents said they had no plans to require vaccines.
To encourage vaccination, some employers—like Delta Air Lines—are introducing or considering company healthcare plan surcharges for unvaccinated employees. However, in this article published via Advisory Board, McDermott Partner Judith Wethall said few employers have actually “pulled the trigger” on such a move.
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