An Update on Vaccine Incentives: Can Employers Raise Health Insurance Premiums for Unvaccinated Employees?
By: Jackson O'Brien
Last week, BrownWinick provided an update on COVID-19 vaccinations in the workplace, including anticipated requirements from the Department of Labor’s Occupational Safety and Health Administration (“OSHA”). It is expected that these requirements will apply only to certain larger employers, although the anticipated rule is still in its early stages. Prior to last week’s announcement by President Biden, some employers such as Delta Air Lines had already announced they would now require unvaccinated employees to pay higher health insurance premiums. In other words, employers are differentiating health insurance premiums based on vaccination status: lower premiums for vaccinated employees and higher premiums for unvaccinated employees. This approach remains relevant for employers who are not subject to the anticipated OSHA regulations as well as those who choose to continue allowing regular testing as an alternative to vaccination.
Although potentially controversial, there is an innate logic to this type of incentive. Unvaccinated employees are more likely to experience severe illness if infected with COVID-19 and thus risk incurring higher medical costs. Moreover, unvaccinated employees are more likely to transmit the virus to other employees. Further spread is a real concern as COVID-19 variants continue to emerge. And, notably, this type of penalty is not without precedent. For example, employees who smoke are often required to pay higher health insurance premiums as well. Thus, encouraging vaccination could be viewed as fitting in nicely with other wellness programs and rewards.
Notably, there is no specific guidance from the federal government approving or disapproving of this type of incentive. Thus, employers should be cautious and avoid crafting incentives that could be deemed coercive. Any discount or surcharge in health insurance premiums should also be designed in accordance with applicable federal statutes such as HIPAA and the ACA. These laws limit the amount of any such discount or surcharge, impose certain notice and accommodation requirements, and require employers to make sure the program is available to all similarly situated employees. Employers should also be mindful of potential disability discrimination issues and be accommodating of those with medical or religious exemptions from vaccination. The landscape in this area of the law continues to evolve over time, and employers should anticipate additional changes in the future.
Undoubtedly, vaccine incentives such as differentiated health insurance premiums may be a helpful stepping stone to a safer workplace. But this solution is not without its risks and may not be right for every employer. At BrownWinick, we recognize those competing concerns. Our team is always happy to help employers create the plan that works for them, their employees, and their workplace.