PREMIUM SURCHARGES
This information is intended as an overview of the various compliance concerns for implementing a wellness program related to COVID-19 vaccination status .
ACTION STEPS
Employers that wish to impose a premium surcharge or offer an incentive based on COVID-19 vaccination status should carefully consider the compliance obligations related to this strategy . Because this would likely need to be structured as a wellness program , employers should become familiar with the legal requirements for wellness programs .
Employers may need to make exceptions to an incentive or penalties for employees who are unable to get vaccinated due to a disability or a strongly held religious belief . Treating those employees differently because of their lack of vaccination could potentially be discriminatory under the Americans with Disabilities Act ( ADA ) or Title VII of the Civil Rights Act .
LEGAL BACKGROUND
There are several legal issues involved in designing workplace wellness programs . Wellness programs must be carefully structured to comply with both state and federal laws . The main federal laws that should be considered when designing a wellness program related to COVID-19 vaccination status are the following :
• the Health Insurance Portability and Accountability Act ( HIPAA );
• the ADA ; and
• the Affordable Care Act ( ACA ).
These laws each have their own set of legal rules for acceptable wellness program design , which are not always consistent with one another .
HIPAA NONDISCRIMINATION RULES
Under HIPAA , workplace wellness programs are divided into two categories : participatory wellness programs and health-contingent wellness programs . This distinction is important because participatory wellness programs are not subject to the same restrictions on incentives or rewards that apply to healthcontingent wellness programs .
Note that federal agencies have not issued guidance addressing COVID-19 vaccination-related wellness programs , including which category this type of program would fall under .
ADA REQUIREMENTS
The ADA prohibits employers with 15 or more employees from discriminating against individuals with disabilities . As a general rule , to comply with the ADA , covered employers should structure their wellness plans to ensure that qualified individuals with disabilities :
1 . have equal access to the program ’ s benefits ; and
2 . are not required to complete additional requirements in order to obtain equal benefits under the wellness program .
ACA REQUIREMENTS
The ACA imposes “ employer shared responsibility ” requirements on applicable large employers ( ALEs ), also known as the “ pay or play rules ” or “ employer mandate .” Under these rules , ALEs that do not offer a certain level of health coverage to their full-time employees ( and dependents ) may be subject to a penalty . The affordability of any health coverage offered by an ALE is key in determining whether the ALE will be subject to an employer shared responsibility penalty .
The affordability of an employersponsored plan is determined by assuming that each employee fails to satisfy the wellness program ’ s requirements ( unless the wellness program is related to tobacco use ). This means that the affordability of a plan that includes premium discounts for vaccinated individuals will generally be based on the higher premium amount charged to nonvaccinated individuals . As a result , premium incentives related to COVID-19 vaccination status may cause some employer-sponsored plans to be considered unaffordable for purposes of the ACA ’ s employer shared responsibility penalties , potentially resulting in penalties for those employers in some cases .
STATE LAWS
Several states have enacted laws related to COVID-19 vaccination requirements that may impact an employer ’ s ability to impose premium surcharges or incentives related to vaccination status . Many of these laws prohibit employers from coercing their employees to get vaccinated or discriminating against employees based on vaccination status . Employers should consult the laws in their particular states and carefully consider their options with respect to their employees ’ COVID-19 vaccination status . +
This information is not intended to be exhaustive nor should it be construed as legal advice .
BY : BARRY E . FIELDS VICE PRESIDENT OF EMPLOYEE BENEFITS JGS INSURANCE
Barry Fields has over 30 years of employee benefits experience advising clients in a wide range of industries , professional and industrial , public and private , throughout the United States and worldwide .
Barry specializes in providing full-service benefits consulting to clients including program design , compliance , plan funding , underwriting , wellness programs , employee communications , benefits administration , employee advocacy and the use of effective strategies in benefits management .
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