The federal Centers for Medicare & Medicaid Services (CMS) issued a set of Frequently Asked Questions about the interaction of HIPAA, the Affordable Care Act, and various group health plan issues relating to the COVID-19 pandemic. CMS includes participation by the Departments of Labor, Health and Human Services, and Treasury, and therefore the FAQs serve as a combined advisory to employers from the federal agencies with jurisdiction over such plans.

Most importantly, the guidance confirms that group health plans may offer premium discounts for participants who receive COVID-19 vaccinations. Those discounts must be offered in compliance with final wellness plan rules issued by these federal agencies. Among other requirements, the plan must offer a reasonable alternative way to obtain the discount for participants who cannot receive the vaccine for medical reasons.

These rules also limit the monetary discount that can be offered through wellness incentives. The total amount of the discount, when added together with other wellness incentives that are contingent on meeting a health standard, generally cannot exceed 30 percent of the cost to the employer of employee-only coverage under the plan. Some employers may already have other wellness incentives that would need to be taken into account. The guidance also confirms the interaction between premium discounts and health care coverage affordability determinations for group health plans in connection with the Affordable Care Act’s employer mandate.

Some employers had contemplated excluding coverage under their group health plans for COVID-19 treatment for unvaccinated employees. The FAQs make clear this is not permissible under HIPAA’s nondiscrimination rules, and confirm that a group health plan cannot condition eligibility or benefits on a person’s vaccination status.

In addition, the FAQs address when group health plans must add coverage for preventative services associated with COVID-19. This guidance should provide employers with a clearer roadmap for incentivizing COVID-19 vaccinations.

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