In dollars and cents, sick people cost employer-provided group health plans more than do well people. So, if participants and beneficiaries engage in behaviors that are statistically proven to increase the likelihood of their incurring greater health care costs, one could easily conclude that a premium contribution increase for those individuals might be called for. But life is rarely that simple, is it?
The question of adjusting health care premium contributions based on COVID-19 vaccination status is a question of cost, but it’s also a question of federal and state compliance, employee morale, public relations, public safety, and application of a business’s mission, vision, and values. I count at least 6 moving parts there, and even particle physicists throw up their hands when faced with more than 2, so what is a plan administrator to do?
Simply mandating that all employees be vaccinated as a condition of employment (absent medical contraindication or sincerely-held religious objection) seems to be the safe route. But what if you happen to know that imposing such a mandate could spark an exodus of employees that your company can’t afford to lose in an already-tight labor market? Although 70% of adult Americans have received at least 1 COVID-19 vaccine dose as of August 2021, the percentage of U.S. adults who say they oppose the vaccines has remained unchanged since December, according to a report from the Kaiser Family Foundation, at 25%. 15% reported that they “definitely would not” get vaccinated. What this means is that, of your unvaccinated employees, 50% to 83% are likely to stay unvaccinated no matter what you do.
What you can’t do, if your plan is subject to the Affordable Care Act, is increase the premiums of the non-vaccinated. The ACA only permits insurance companies to charge discriminatory premiums for: tobacco use, age, family coverage, and geography.
Even though the regulations surrounding surcharges and employee wellness programs have played out as something of a hokey-pokey over the course of the last year or two, some experts have come forth saying that a COVID-19 non-vaccination surcharge might be permissible. For example, in an article published in the National Law Review, the firm of Jackson Lewis, P.C. offers the following guiding questions for setting up such a program:
If you’ve got answers to those questions, perhaps the “surcharge” option is the best route for your company.
In dealing with those who have begun to stray, the Talmud teaches: “One should always have the left hand push away and the right draw closer”. Here, an employer’s “right hand” might draw employees towards wellness incentives, rather than penalties.
If employees confirm that they’ve been vaccinated on their own (i.e. not in response to an employer directive), guidance from the EEOC promulgated on May 28, 2021 would seem to permit employers to offer an incentive, so long as the incentive is not “so substantial as to be coercive.” Additionally, the incentive must not extend to the employee’s family members receiving a vaccination administered by the employer or its agent, as that could violate Title II of the Genetic Information Nondiscrimination Act, according to the EEOC.
What does “so substantial as to be coercive” mean? Your guess is as good as ours. The prior Proposed Rule, since withdrawn, forbad incentives that were greater than de minimis[1]. The ACA/HIPAA wellness rules permit incentives of up to 30% of the employee’s cost for self-only coverage (50% for tobacco cessation), so perhaps a 30% incentive hits that “sweet spot” between “de minimis” and “coercive”? Nobody knows for sure, but we’d like to think that Federal regulatory agencies would be disinclined to begin sharpening their knives for employers who are trying to do the right thing during a public health crisis.[2]
Finally, in conjunction with, or instead of, the above options, an employer might consider requiring periodic COVID-19 testing for its unvaccinated employees. Ordinarily, if an employer would require a particular employee to take a COVID-19 diagnostic test as a condition for returning to work after leave or require an employee to submit to testing where the employer believes that employee would pose a “direct threat” to the workplace, “the employer must pay all costs associated with the visit”. However, EEOC enforcement guidance clarifies that “periodic testing and monitoring”, such as periodic COVID-19 testing for the unvaccinated, may be permissible absent evidence of “direct threat”, and, unlike with “disability-related inquiries and medical examinations relating to leave”, the employer may, in fact, require the employee to pay for the testing.
As is the case with many decisions, laying out all your variables and having a good long think is a fine start. You want to keep health insurance costs down, you want happy employees, you don’t want to lose clients or customers, and staying within the bounds of the law would be nice too. In stressful times, “reactive” policymaking or rote reliance on pre-existing processes can be tempting and may even feel like the safe option. However, a thoughtful analysis of all the “moving parts” is your best inoculation against failure.
[1] Latin for: “too small to bother concerning yourself about”.
[2] Other “outside-the-box” ideas include an employer-wide raffle, where participants place a copy of their COVID-19 vaccination cards into a bowl for a cash-prize drawing. Sadly, we are reminded that this likely violates federal and state “gambling” laws. Sorry, Nana, you’ll have to stick with bingo. ¶ 45,953 Exercise Caution With Covid-19 Vaccine Incentives To Avoid Running Afoul of Gambling Laws — Expert Guidance, HR Compl. P 45953 (“The three basic elements of gambling are consideration, chance, and prize. Generally, most states define gambling or games of chance as any contest or scheme where a person risks or provides something of value for the chance of winning a prize where chance cannot be eliminated through skill.”).