Last week, a client asked a timely and interesting question. The employer asked whether it can begin charging higher group health insurance premiums to employees who have declined the COVID-19 vaccination. The premium difference would be an approach similar to that already imposed by many plans for employees who use tobacco products. Presumably, it potentially would be justified by the additional costs of hospitalization and related expenses associated with treatment of unvaccinated plan participants for COVID-19 related illness.
After giving the question some thought, our response to the client was that there is currently no clear legal roadmap for charging the higher premiums. First, HIPAA non-discrimination and wellness plan rules, along with EEOC wellness plan regulations are somewhat in a state of flux, and higher premium charges potentially could be a prohibited penalty against non-vaccinated participants. Additional state law restrictions against group medical plan premiums may also limit employers’ ability to charge unvaccinated participants more.
Even if these hurdles can be overcome, how would plan sponsors determine the premium difference? Unlike tobacco use, there may not be available actuarial data that determines the actual difference in cost to the plan between vaccinated and unvaccinated participants. Also, charging higher group health plan premiums to employees or other plan participants who medically cannot be vaccinated may constitute disability discrimination under the ADA.
While the idea of charging higher premiums may appear to be an effective incentive to encourage unvaccinated employees to get their shots, employers should not take this step until legal concerns over this practice are resolved.