With the FDA approval of the COVID-19 vaccine, an increase in vaccine mandates is inevitable, in both the private and public sectors. However, some employers are opting for incentives for their employees to get vaccinated rather than enforcing mandates. The most effective and practical way is to incorporate incentives into a wellness program.
What Employers Need to Know
Some employers are applying a discount on medical insurance premiums for those employees who get vaccinated, and adding a surcharge to those who have not received the vaccine. This approach is comparable to companies charging or not charging for tobacco use. To implement this into a wellness program, compliance and legal requirements need to be addressed. Alltrust Insurance has highlighted some of the considerations and risks employers must keep in mind when encouraging employees to get the COVID-19 vaccination and implementing a wellness program.
The Health Insurance Portability and Accountability Act can prohibit group health plans and insurers from using health factors like vaccination status to discriminate among similarly situated individuals with regard to premiums and contributions. The statutes in place that do not allow employers to charge employees different premiums for group health coverage based solely on single health factors have an exception. The exception to this rule is if the individual participates in a wellness program.
Healthcare.gov defines wellness programs as “a program intended to improve and promote health and fitness… The program allows your employer or plan to offer you premium discounts… and other incentives to participate.” A program that incentivizes the COVID-19 vaccine would likely be an activity-only health-contingent program. An activity-only wellness program requires an individual to perform or complete an activity in order to receive a reward but does not require the individual to attain a specific health outcome. This type of program needs to satisfy five criteria to qualify for HIPAA’s nondiscrimination exception:
- Reward frequency. The program must provide eligible individuals an opportunity to qualify for the reward under the wellness program at least once a year.
- Size of the reward. The total reward for all the wellness programs cannot exceed 30% of the total cost of coverage.
- Reasonable design. The program must be reasonably designed to promote health, prevent disease, and not be overly burdensome.
- Uniform availability. The full reward for activity-only wellness programs must be available to all similarly situated individuals. Allow a reasonable alternative standard (or waiver) for any individual for whom it is unreasonably difficult or inadvisable due to a medical condition.
- Notice of availability. In all materials that describe the terms of the program, the plan must disclose the availability of the reasonable alternative standard.
ADA and EEOC Compliance
In addition to following the HIPAA guidelines and exemption, compliance with the Americans with Disabilities Act needs to be followed as well. This rule requires any medical examination or inquiry to be entirely voluntary, which many wellness programs can fall under this rule. There has been much debate within the Equal Employment Opportunity Commission (EEOC) about this voluntary standard.
In 2016, the EEOC enforced a limit on the size of the rewards offered under a wellness program to be capped at 30% of the total cost of coverage. Consequently, in 2018 this rule was ultimately dismissed after a federal court found that the 30% reward limit was not a sensible interpretation of the term ‘voluntary’. The frequent change of the reward size is to deter employees from feeling coerced into the wellness program if the incentive amount is too high.
In January 2021, the EEOC proposed new rules that can amend the 2016 ADA wellness program rules.
- Employers must still make any wellness program available to all employees and provide accommodation or alternatives to those with disabilities. Employers are obligated to protect any medical information obtained.
- In order to be voluntary, employers cannot offer more than a de minimis incentive; a water bottle, mug, t-shirt, a gift card in a modest amount.
- There is an exception for health-contingent wellness programs that are part of a group health plan.
- The new proposed rules remove the requirement of the employer having to provide all employees with notice of a general explanation of what information will be collected, how it will be used, who will receive it, and what will be done to keep it private.
What To Do Next
As employers continue to adapt to a global pandemic that has affected everyone inside and outside of the workplace, the distribution of the COVID-19 vaccine has given a bit of relief. While advocating for employees to get vaccinated might be a simple and harmless task, the compliances and regulations stated above must be followed in order to prevent any discrimination or legal ramifications.
When implementing a wellness program, employers should determine the specific action that is to be rewarded (first dose, second dose, boosters) and the type of reward that will be the most effective. To avoid any major repercussions, opting for an incentive for getting vaccinated rather than a mandate might be better suited for your workplace. Employers must not only comply with the rules and regulations of HIPAA, ADA, and EEOC but also ERISA, COBRA, GINA, and the ACA.
At Alltrust Insurance, we are here to help the health and wellness of your employers and employees. Curating and incorporating an effective wellness program that adheres to the compliances of federal entities might be a challenging task. Let Alltrust Insurance assist you to achieve this incredibly important task and keep your employees healthy. Contact an Alltrust representative today for more information on creating an effective wellness plan for your business.
This Benefits Brief is not intended to be exhaustive, it is for informational purposes only and should not be considered legal or tax advice. A qualified attorney or other appropriate professional should be consulted on all legal compliance matters.