Coverage and Premium Discounts
On Oct. 4, 2021, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury
(Departments) issued FAQs addressing rules regarding premium incentives for COVID-19 vaccinations and rapid coverage of preventive services for COVID-19.
Premium Incentives for COVID-19 Vaccinations
The FAQs clarify that a group health plan (or health insurance issuer offering coverage in connection with a group health plan) may offer participants a premium discount for receiving a COVID-19 vaccination. However, plans generally may not condition eligibility for benefits or coverage on vaccination status, and any discount must comply with the final wellness program rules.
Under these rules, a premium discount that requires an individual to obtain a COVID-19 vaccination would be considered an activity-only wellness program, which is a type of health-contingent wellness program. These programs must comply with the regulations’ five nondiscrimination criteria, including an incentive limit and a requirement to offer a reasonable alternative standard in some cases.
The maximum permissible reward (or penalty) under a health-contingent wellness program that is part of a group health plan (and is not related to tobacco use) is 30% of the cost of coverage.
Rapid Coverage of Preventive Services for COVID-19
According to the FAQs, effective Jan. 5, 2021, plans and issuers must cover, without cost sharing, any COVID-19 vaccines and their administration immediately once the particular vaccine becomes authorized under an emergency use authorization (EUA) or approved under a biologics license application (BLA). This coverage must be provided consistent with the scope of the EUA or BLA, including any amendment, such as to allow for an additional dose to certain individuals, booster doses or the expansion of the age demographic for whom the vaccine is authorized or approved.
Impact of the HIPAA Privacy Rule on COVID-19 Vaccine Inquiries
On Sept. 30, 2021, the Department of Health and Human Services (HHS) issued frequently asked questions (FAQs) on the application of the Health Insurance Privacy and Accountability Act (HIPAA) Privacy Rule on COVID-19 vaccination and the workplace.
The FAQs provide that the HIPAA Privacy Rule does not prohibit any person (an individual or an entity, such as a business)—including HIPAA-covered entities and business associates—from asking whether an individual has received a COVID-19 vaccine. Rather, the Privacy Rule regulates how and when a covered entity or its business associate may use or disclose protected health information (PHI), including information about an individual’s vaccination status.
In addition, the Privacy Rule does not prevent any individual from disclosing whether he or she has been vaccinated against COVID-19 or any other disease. The Privacy Rule does not apply to individuals’ disclosures about their own health information.
The Privacy Rule also does not prohibit an employer from requiring an employee to disclose whether they have received a COVID-19 vaccine to the employer, clients or other parties. The Privacy Rule does not apply to employment records and does not regulate what information can be requested from employees as part of the terms and conditions of employment. However, documentation or other confirmation of vaccination must be kept confidential and stored separately from the employee’s personnel files under Title I of the Americans with Disabilities Act (ADA).
In addition, other federal or state laws do address terms and conditions of employment. Similarly, other state or federal laws address whether individuals are required to disclose whether they have received a vaccine under certain circumstances.
Clarification on Testing and Vaccination
On Feb. 26, 2021, the Departments of Labor, Health and Human Services (HHS), and the Treasury issued FAQ guidance to clarify health coverage requirements related to COVID-19. Then, on Oct. 4, 2021, the Departments issued additional FAQ guidance further clarifying health coverage requirements related to COVID-19 vaccination.
Coverage of COVID-19 Diagnostic Testing
Health plans and issuers must cover COVID-19 diagnostic items and services without cost-sharing. The FAQs explain that plans and issuers:
- May not use medical screening criteria to deny (or impose cost sharing on) a claim for COVID-19 diagnostic testing for an asymptomatic person with no known or suspected exposure to COVID-19.
- May distinguish between COVID-19 diagnostic testing of asymptomatic people that must be covered, and testing for general workplace health and safety or other purposes not primarily intended for individualized diagnosis or treatment of COVID-19.
- Must assume that a test is for individualized clinical assessment if it is provided by a licensed or authorized provider, including at a state- or locality-administered site, a drive-through site or a site that does not require appointments.
These FAQs also provide guidance regarding:
- Coverage of COVID-19 vaccines and other preventive care services;
- Notice requirements for plans and issuers regarding coverage of preventive care services; and
- Requirements for employee assistance programs (EAPs) and on-site medical clinics that administer COVID-19 vaccines to be considered excepted benefits.
Health Plans Must Cover COVID-19 Vaccine Without Cost Sharing
On Dec. 12, 2020, the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) recommended use of Pfizer Inc.’s COVID-19 vaccine for individuals 16 years of age and older. The Food and Drug Administration (FDA) approved the vaccine one day earlier.
The ACIP recommendation triggers the requirement for non-grandfathered group health plans and health insurance issuers to cover the vaccine without cost sharing. Grandfathered plans may choose to cover the vaccine, and could be required to do so under state law or applicable insurance policies.
Coverage of COVID-19 Preventive Care Services
Non-grandfathered group health plans, and health insurance issuers offering group or individual health insurance coverage, must cover coronavirus preventive services, including recommended COVID–19 immunizations, without cost sharing. During the COVID-19 public health emergency, covered services may be provided by in-network or out-of-network providers.
Coverage of these immunizations must be provided, even if not listed for routine use on the CDC’s Immunization Schedules. Plans and issuers subject to Section 2713 of the Public Health Service Act must also cover, without cost sharing, items and services that are integral to the furnishing of recommended preventive services, including immunization administration.
Coverage Effective Date
Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), plans and issuers must cover the vaccine within 15 business days after the date the USPSTF or ACIP makes an applicable recommendation regarding a qualifying coronavirus preventive service.
As a result, effective Jan. 5, 2021, plans and issuers must cover, without cost sharing, any COVID-19 vaccines (and their administration) immediately once the particular vaccine becomes authorized under an emergency use authorization (EUA) or approved under a biologics license application (BLA). This coverage must be provided consistent with the scope of the EUA or BLA for the particular vaccine, including any EUA or BLA amendment, such as to allow for the administration of an additional dose to certain individuals, administration of booster doses or the expansion of the age demographic for whom the vaccine is authorized or approved.
EEOC FAQs on Mandatory COVID-19 Vaccinations and the ADA
On Dec. 16, 2020, the Equal Employment Opportunity Commission (EEOC) issued additional answers to frequently asked questions (FAQs) about how employers should comply with the Americans with Disabilities Act (ADA) and other federal fair employment laws while also observing all applicable emergency workplace safety guidelines during the coronavirus pandemic.
The new FAQs address whether employers may require employees to receive COVID-19 vaccinations. They were added to guidance that the EEOC first issued on March 18, 2020, and then updated several times. To view the full set of FAQs please visit the EEOC’s Pandemic Preparedness in the Workplace and the ADA website. Employers are subject to the ADA if they have 15 or more employees. Smaller employers may be subject to similar rules under applicable state or local laws.
The availability of COVID-19 vaccinations may raise questions about the applicability of various equal employment opportunity (EEO) laws, including the ADA and the Rehabilitation Act, GINA, and Title VII, including the Pregnancy Discrimination Act. The EEO laws do not interfere with or prevent employers from following CDC or other federal, state and local public health authorities’ guidelines and suggestions.
ADA and Vaccinations
K.1. For any COVID-19 vaccine that has been approved or authorized by the Food and Drug Administration
(FDA), is the administration of a COVID-19 vaccine to an employee by an employer (or by a third party with whom the employer contracts to administer a vaccine) a “medical examination” for purposes of the ADA?
No. The vaccination itself is not a medical examination. As the EEOC explained in guidance on disability-related inquiries and medical examinations, a medical examination is “a procedure or test usually given by a health care professional or in a medical setting that seeks information about an individual’s physical or mental impairments or health.”
Examples include “vision tests; blood, urine, and breath analyses; blood pressure screening and cholesterol testing; and diagnostic procedures, such as x-rays, CAT scans, and MRIs.” If a vaccine is administered to an employee by an employer for protection against contracting COVID-19, the employer is not seeking information about an individual’s impairments or current health status and, therefore, it is not a medical examination.
Although the administration of a vaccination is not a medical examination, pre-screening vaccination questions may implicate the ADA’s provision on disability-related inquiries, which are inquiries likely to elicit information about a disability. If the employer administers the vaccine, it must show that such pre-screening questions it asks employees are “job-related and consistent with business necessity.”
K.2. According to the CDC, health care providers should ask certain questions before administering a vaccine to ensure that there is no medical reason that would prevent the person from receiving the vaccination. If the employer requires an employee to receive the vaccination from the employer (or a third party with whom the employer contracts to administer a vaccine) and asks these screening questions, are these questions subject to the ADA standards for disability-related inquiries?
Yes. Pre-vaccination medical screening questions are likely to elicit information about a disability. This means that such questions, if asked by the employer or a contractor on the employer’s behalf, are “disability-related” under the ADA. Thus, if the employer requires an employee to receive the vaccination, administered by the employer, the employer must show that these disability-related screening inquiries are “job-related and consistent with business necessity.” To meet this standard, an employer would need to have a reasonable belief, based on objective evidence, that an employee who does not answer the questions and, therefore, does not receive a vaccination, will pose a direct threat to the health or safety of her or himself or others. See Question K.5. below for a discussion of direct threat.
By contrast, there are two circumstances in which disability-related screening questions can be asked without needing to satisfy the “job-related and consistent with business necessity” requirement. First, if an employer has offered a vaccination to employees on a voluntary basis (that is, employees choose whether to be vaccinated), the ADA requires that the employee’s decision to answer pre-screening, disability-related questions also must be voluntary. If an employee chooses not to answer these questions, the employer may decline to administer the vaccine but may not retaliate against, intimidate, or threaten the employee for refusing to answer any questions.
Second, if an employee receives an employer-required vaccination from a third party that does not have a contract with the employer, such as a pharmacy or other health care provider, the ADA “job-related and consistent with business necessity” restrictions on disability-related inquiries would not apply to the pre-vaccination medical screening questions.
The ADA requires employers to keep any employee medical information obtained in the course of the vaccination program confidential.
K.3. Is asking or requiring an employee to show proof of receipt of a COVID-19 vaccination a disability-related inquiry?
No. There are many reasons that may explain why an employee has not been vaccinated, which may or may not be disability-related. Simply requesting proof of receipt of a COVID-19 vaccination is not likely to elicit information about a disability and, therefore, is not a disability-related inquiry. However, subsequent employer questions, such as asking why an individual did not receive a vaccination, may elicit information about a disability and would be subject to the pertinent ADA standard that they be “job-related and consistent with business necessity.” If an employer requires employees to provide proof that they have received a COVID-19 vaccination from a pharmacy or their own health care provider, the employer may want to warn the employees not to provide any medical information as part of the proof in order to avoid implicating the ADA.
ADA and Title VII Issues Regarding Mandatory Vaccinations
K.4. Where can employers learn more about Emergency Use Authorizations (EUA) of COVID-19 vaccines?
Some COVID-19 vaccines may only be available to the public for the foreseeable future under EUA granted by the FDA, which is different than approval under FDA vaccine licensure. The FDA has an obligation to ensure that recipients of the vaccine under an EUA are informed, to the extent practicable under the applicable circumstances, that FDA has authorized the emergency use of the vaccine, of the known and potential benefits and risks, the extent to which such benefits and risks are unknown, that they have the option to accept or refuse the vaccine, and of any available alternatives to the product.
The FDA says that this information is typically conveyed in a patient fact sheet that is provided at the time of the vaccine administration and that it posts the fact sheets on its website. More information about EUA vaccines is available on the FDA’s EUA page.
K.5. If an employer requires vaccinations when they are available, how should it respond to an employee who indicates that he or she is unable to receive a COVID-19 vaccination because of a disability?
The ADA allows an employer to have a qualification standard that includes “a requirement that an individual shall not pose a direct threat to the health or safety of individuals in the workplace.” However, if a safety-based qualification standard, such as a vaccination requirement, screens out or tends to screen out an individual with a disability, the employer must show that an unvaccinated employee would pose a direct threat due to a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.”
Employers should conduct an individualized assessment of the following four factors in determining whether a direct threat exists:
- The duration of the risk;
- The nature and severity of the potential harm;
- The likelihood that the potential harm will occur; and
- The imminence of the potential harm.
A conclusion that there is a direct threat would include a determination that an unvaccinated individual will expose others to the virus at the worksite. If an employer determines that an individual who cannot be vaccinated due to disability poses a direct threat at the worksite, the employer cannot exclude the employee from the workplace—or take any other action—unless there is no way to provide a reasonable accommodation (absent undue hardship) that would eliminate or reduce this risk so the unvaccinated employee does not pose a direct threat.
If there is a direct threat that cannot be reduced to an acceptable level, the employer can exclude the employee from physically entering the workplace, but this does not mean the employer may automatically terminate the worker. Employers will need to determine if any other rights apply under the EEO laws or other federal, state and local authorities.
For example, if an employer excludes an employee based on an inability to accommodate a request to be exempt from a vaccination requirement, the employee may be entitled to accommodations such as performing the current position remotely. This is the same step that employers take when physically excluding employees from a worksite due to a current COVID-19 diagnosis or symptoms; some workers may be entitled to telework or, if not, may be eligible to take leave under the Families First Coronavirus Response Act, under the FMLA or under the employer’s policies.
Managers and supervisors responsible for communicating with employees about compliance with the employer’s vaccination requirement should know how to recognize an accommodation request from an employee with a disability and know to whom the request should be referred for consideration. Employers and employees should engage in a flexible, interactive process to identify workplace accommodation options that do not constitute an undue hardship (significant difficulty or expense).
This process should include determining whether it is necessary to obtain supporting documentation about the employee’s disability and considering the possible options for accommodation given the nature of the workforce and the employee’s position. The prevalence in the workplace of employees who already have received a COVID-19 vaccination and the amount of contact with others, whose vaccination status could be unknown, may impact the undue hardship consideration.
In discussing accommodation requests, employers and employees also may find it helpful to consult the Job Accommodation Network (JAN) website as a resource for different types of accommodations. JAN’s materials specific to COVID-19 are available here.
Employers may rely on CDC recommendations when deciding whether an effective accommodation that would not pose an undue hardship is available, but as explained further in Question K.7., there may be situations where an accommodation is not possible. When an employer makes this decision, the facts about particular job duties and workplaces may be relevant. Employers also should consult applicable Occupational Safety and Health Administration standards and guidance. Employers can find OSHA COVID-specific resources here.
Managers and supervisors are reminded that it is unlawful to disclose that an employee is receiving a reasonable accommodation or retaliate against an employee for requesting an accommodation.
K.6. If an employer requires vaccinations when they are available, how should it respond to an employee who indicates that he or she is unable to receive a COVID-19 vaccination because of a sincerely held religious practice or belief?
Once an employer is on notice that an employee’s sincerely held religious belief, practice or observance prevents the employee from receiving the vaccination, the employer must provide a reasonable accommodation for the religious belief, practice or observance unless it would pose an undue hardship under Title VII of the Civil Rights Act.
Courts have defined “undue hardship” under Title VII as having more than a de minimis cost or burden on the employer. EEOC guidance explains that because the definition of religion is broad and protects beliefs, practices, and observances with which the employer may be unfamiliar, the employer should ordinarily assume that an employee’s request for religious accommodation is based on a sincerely held religious belief. If, however, an employee requests a religious accommodation, and an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, practice, or observance, the employer would be justified in requesting additional supporting information.
K.7. What happens if an employer cannot exempt or provide a reasonable accommodation to an employee who cannot comply with a mandatory vaccine policy because of a disability or sincerely held religious practice or belief?
If an employee cannot get vaccinated for COVID-19 because of a disability or sincerely held religious belief, practice, or observance, and there is no reasonable accommodation possible, then it would be lawful for the employer to exclude the employee from the workplace. This does not mean the employer may automatically terminate the worker. Employers will need to determine if any other rights apply under the EEO laws or other federal, state and local authorities.
Title II of the Genetic Information Nondiscrimination Act (GINA) and Vaccinations
K.8. Is Title II of GINA implicated when an employer administers a COVID-19 vaccine to employees or requires employees to provide proof that they have received a COVID-19 vaccination?
No. Administering a COVID-19 vaccination to employees or requiring employees to provide proof that they have received a COVID-19 vaccination does not implicate Title II of GINA because it does not involve the use of genetic information to make employment decisions, or the acquisition or disclosure of “genetic information” as defined by the statute. This includes vaccinations that use messenger RNA (mRNA) technology, which will be discussed more below. As noted in Question K.9. however, if administration of the vaccine requires pre-screening questions that ask about genetic information, the inquiries seeking genetic information, such as family members’ medical histories, may violate GINA.
Under Title II of GINA, employers may not (1) use genetic information to make decisions related to the terms, conditions, and privileges of employment, (2) acquire genetic information except in six narrow circumstances, or (3) disclose genetic information except in six narrow circumstances.
Certain COVID-19 vaccines use mRNA technology. This raises questions about genetics and, specifically, about whether such vaccines modify a recipient’s genetic makeup and, therefore, whether requiring an employee to get the vaccine as a condition of employment is an unlawful use of genetic information. The CDC has explained that the mRNA COVID-19 vaccines “do not interact with our DNA in any way” and “mRNA never enters the nucleus of the cell, which is where our DNA (genetic material) is kept.” (See this link for a detailed discussion about how mRNA vaccines work). Thus, requiring employees to get the vaccine, whether it uses mRNA technology or not, does not violate GINA’s prohibitions on using, acquiring or disclosing genetic information.
K.9. Does asking an employee the pre-vaccination screening questions before administering a COVID-19 vaccine implicate Title II of GINA?
Pre-vaccination medical screening questions are likely to elicit information about disability, as discussed in Question K.2., and may elicit information about genetic information, such as questions regarding the immune systems of family members. It is not yet clear what screening checklists for contraindications will be provided with COVID-19 vaccinations.
GINA defines “genetic information” to mean:
- Information about an individual’s genetic tests;
- Information about the genetic tests of a family member;
- Information about the manifestation of disease or disorder in a family member (family medical history);
- Information about requests for, or receipt of, genetic services or the participation in clinical research that includes genetic services by the an individual or a family member of the individual; and
- Genetic information about a fetus carried by an individual or family member or of an embryo legally held by an individual or family member using assisted reproductive technology.
If the pre-vaccination questions do not include any questions about genetic information (including family medical history), then asking them does not implicate GINA. However, if the pre-vaccination questions do include questions about genetic information, then employers who want to ensure that employees have been vaccinated may want to request proof of vaccination instead of administering the vaccine themselves.
GINA does not prohibit an individual employee’s own health care provider from asking questions about genetic information, but it does prohibit an employer or a doctor working for the employer from asking questions about genetic information. If an employer requires an employee to provide proof that he or she has received a COVID-19 vaccination from his or her own health care provider, the employer may want to warn the employee not to provide genetic information as part of the proof. As long as this warning is provided, any genetic information the employer receives in response to its request for proof of vaccination will be considered inadvertent and therefore not unlawful under GINA. See 29 CFR 1635.8(b)(1)(i) for model language that can be used for this warning.
FAQs on HIPAA Nondiscrimination and Wellness Programs Related to Premium Discounts for COVID-19 Vaccinations
Plans and issuers are generally prohibited from discriminating against participants, beneficiaries, and enrollees in eligibility, premiums or contributions based on a health factor. An exception for group health plans allows premium discounts, rebates or modification of otherwise applicable cost-sharing requirements (including copayments, deductibles and coinsurance) in return for adherence to certain programs of health promotion and disease prevention, commonly referred to as wellness programs.
On June 3, 2013, the Departments issued final wellness program regulations that address the requirements for wellness programs provided in connection with group health coverage. Among other things, these regulations set the maximum permissible reward (or penalty) under a health-contingent wellness program that is part of a group health plan (and any related health insurance coverage) at 30% of the cost of coverage (or 50% for wellness programs designed to prevent or reduce tobacco use). The final wellness program regulations also address the reasonable design of health-contingent wellness programs and, with respect to rewards offered under these programs, the reasonable alternatives that must be offered to avoid prohibited discrimination.
In addition, under the ACA’s employer shared responsibility rules, applicable large employers (ALEs) may be liable for penalties if they offer coverage that is not affordable. Nondiscriminatory wellness program incentives offered by an employer-sponsored plan that affect premiums are treated as “not earned” for the purpose of assessing affordability, with the exception of incentives related exclusively to tobacco use. In other words, those wellness program incentives unrelated to tobacco use that provide discounts to employees are disregarded in assessing affordability, while those incentives unrelated to tobacco use that impose surcharges on employees are taken into account in assessing affordability.
The Departments issued the following FAQs to address whether group health plans and issuers can provide incentives to encourage individuals to receive COVID-19 vaccines.
Q3: May a group health plan (or health insurance issuer offering coverage in connection with a group health plan) offer participants in the plan a premium discount for receiving a COVID-19 vaccination?
Yes, if the premium discount complies with the final wellness program regulations. A premium discount that requires an individual to perform or complete an activity related to a health factor (in this case, obtaining a COVID-19 vaccination) to obtain a reward would be considered an activity-only wellness program that must comply with the five criteria described in the final wellness program regulations.
To satisfy these criteria, a wellness program that provides a premium discount to individuals who obtain a COVID-19 vaccination must be reasonably designed to promote health or prevent disease and must provide a reasonable alternative standard to qualify for the discount. For example, the wellness program may offer a waiver or the right to attest to following other COVID-19-related guidelines to individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain the COVID-19 vaccination in order to qualify for the full reward. The plan must also provide notice of the availability of the reasonable alternative standard under the wellness program. Further, the reward the plan provides in connection with the vaccine incentive program must not exceed 30% of the total cost of employee-only coverage and must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.
Example: A group health plan offers a 25% premium discount of the cost of employee-only coverage to all participants who receive a COVID-19 vaccination in accordance with the ACIP recommendations (and does not offer any other reward under other health-contingent wellness programs with respect to the plan). To help facilitate participants receiving the vaccination, the plan also maintains a toll-free hotline to answer questions about COVID-19 vaccination and offer assistance to schedule appointments to receive a COVID-19 vaccination. The plan provides the same premium discount to individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain a COVID-19 vaccination if the individual attests to complying with the CDC’s mask guidelines for unvaccinated individuals. The plan also provides notice of the availability of this alternative to all participants. Participants may qualify annually for this premium discount.
Conclusion: The vaccine incentive program meets the criteria to be an activity-only health-contingent wellness program. The reward the plan provides in connection with the vaccine incentive program does not exceed 30% of the total cost of employee-only coverage and the opportunity to qualify is offered annually. The plan provides a reasonable alternative standard to qualify for the reward (in this case, the opportunity to attest to complying with the CDC’s mask guidelines) to individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain a COVID-19 vaccination, and the plan provides notice of the availability of the reasonable alternative standard. This program is also reasonably designed to promote health and prevent disease (and is not a subterfuge for discriminating based on a health factor), as the program rewards individuals who obtain a COVID-19 vaccination, while the reasonable alternative standard is not overly burdensome, and is also designed to prevent infection with SARS-CoV-2, the virus that causes COVID-19. Further, the plan’s maintenance of a toll-free hotline to provide information about the COVID-19 vaccine and assistance with meeting the underlying standard (in this case, receiving a COVID-19 vaccination or fulfilling the reasonable alternative) are additional facts and circumstances demonstrating that the program is reasonably designed to promote health or prevent disease because they help ensure that the program is not overly burdensome.
Q4: May a group health plan or health insurance issuer condition eligibility for benefits or coverage for otherwise covered items or services to treat COVID-19 on participants, beneficiaries, or enrollees being vaccinated?
No. Federal law generally prohibits plans and issuers from discriminating against participants, beneficiaries and enrollees in eligibility, premiums or contributions based on a health factor. Rules for eligibility include, among other things, rules related to benefits (including rules related to covered benefits and benefit restrictions). Benefits under the plan must be uniformly available to all similarly situated individuals and any restriction on benefits must apply uniformly to all similarly situated individuals and must not be directed at individuals based on a health factor. Accordingly, plans and issuers may not discriminate in eligibility for benefits or coverage based on whether or not an individual obtains a COVID-19 vaccination. Furthermore, while there is an exception to the general prohibition on discrimination based on a health factor for wellness programs that meet federal standards, this exception is available only for premium discounts or rebates, or modifications of otherwise applicable cost-sharing mechanisms, and not for denying eligibility for benefits or coverage based on a health factor.
Q5: How are premium discounts and surcharges for receiving or not receiving the COVID-19 vaccination, respectively, treated for purposes of determining affordability of coverage with respect to the ACA’s employer shared responsibility penalties?
Wellness incentives related to the receipt of COVID-19 vaccinations are treated as not earned for purposes of determining whether employer-sponsored health coverage is affordable. Although premium incentives are permissible as part of a nondiscriminatory wellness program, premium incentives other than incentives relating exclusively to tobacco use—including wellness programs encouraging vaccinations for COVID-19—are treated as not earned when determining the employee’s required contribution for an offer of health coverage for purposes of affordability. Thus, for example, if the individual premium contribution under a COVID-19 vaccination wellness program was reduced by 25%, this reduction is disregarded for purposes of determining whether the offer of that coverage is affordable for purposes of assessing liability for the employer shared responsibility penalties. Conversely, if an individual’s premium contribution for health coverage under a COVID-19 vaccination wellness program is increased by a 25% surcharge for a non-vaccinated individual, that surcharge would not be disregarded in assessing affordability.
The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.