6 Questions to Answer Before Imposing a Surcharge

Many employers are struggling to increase COVID-19 vaccination rates among their workforce, concerned not only about both the safety of the workforce but also the costs of COVID-19 treatment that could be avoided through vaccination. Some are now turning to the possibility of a higher premium cost, or surcharge, for any group health plan participants who remain unvaccinated. What are the hurdles you would have to navigate if you want to impose such a surcharge on your unvaccinated workers? Here are the six questions you need to resolve before undertaking such a plan.

HIPAA Violations Can Be Avoided

Treating group health plan participants differently based upon a health factor – such as whether a participant received a vaccine – is generally prohibited by HIPAA. There is, however, a narrow exception for arrangements that comply with the wellness program rules in the HIPAA regulations. Under a compliant program, an employer may condition an incentive, offered in terms of the amount of employee premium contribution, on an employee’s participation in a wellness program.

Many employers are already familiar with such a system as it pertains to a smoking cessation program. You can develop a properly designed wellness program that takes vaccine status into account. Such a program must comply with all HIPAA wellness program rules and also reflect compliance with recent EEOC guidance related to vaccine accommodations.

The 6 Key Questions

When considering implementing a program that imposes a surcharge on your unvaccinated workers, you should ask the following questions:

Proceed with Caution

Some employers have considered limiting group health plan coverage to those that are vaccinated, or perhaps limiting health plan claims for COVID-19-related illnesses to only those that are vaccinated. However, these suggestions would clearly violate HIPAA non-discrimination rules, and therefore should be avoided.

Used with permission from Fischer Phillips, Leavitt Group’s preferred partner for employment law. This information is provided as educational material only and is not intended as legal, financial or tax advice. Consult your legal counsel for complete details on your compliance requirements for your plan(s).
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