COVID-19 Vaccine Incentives Without the HIPAA Headache

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

On February 26, 2021, the U.S. Department of Labor, along with the U.S. Department of Health and Human Services and the U.S. Department of the Treasury, issued answers to new frequently asked questions (FAQs) interpreting certain provisions of the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This article reviews the portion of the FAQs that directly apply to employer vaccination incentive programs. Previous guidance addressed coverage requirements for COVID-19 vaccines and diagnostic testing.


Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), employer-sponsored group health plans are subject to HIPAA’s portability provisions, including its nondiscrimination rules. An employer creates a group health plan under HIPAA when it provides medical care to its employees directly or through insurance, reimbursement, or otherwise.

An employer may offer a variety of benefits beyond its core medical plan to employees through an employee assistance program (EAP). A broad range of benefits can fall into the EAP category. For purposes of HIPAA’s portability provisions, EAPs that provide medical benefits or incentivize medical care are considered group health plans.

Certain benefits are considered “excepted benefits” under HIPAA. An excepted benefit is not subject to most of HIPAA’s portability requirements. HIPAA provides several categories of excepted benefits, two of which include on-site medical clinics and limited excepted benefits.

An EAP can be classified as an “excepted benefit” and therefore exempt from HIPAA’s portability provisions if it meets the following criteria:

  • The EAP does not provide significant benefits in the nature of medical care or treatment. The amount, scope, and duration of covered services are considered.
  • Benefits under the EAP are not coordinated with the employer’s group health plan.
    • Participants must not be required to use and exhaust benefits under the EAP before becoming eligible for a group health plan.
    • Participants cannot be required to participate in another group health plan to be eligible for benefits under the EAP.
  • The employer does not condition participation in the EAP on employee premiums or contributions.
  • The EAP does not contain cost sharing.

Excepted benefits under an EAP allow employers to offer benefits without having to comply with HIPAA’s portability requirements.

Previous guidance clarified that an employer may offer benefits for COVID-19 diagnosis and testing under an EAP without the EAP losing excepted benefit status.

Benefits for COVID-19 Vaccines

The new guidance permits an employer to provide benefits for COVID-19 vaccines as part of an excepted benefit EAP. By extension, if an EAP provides incentives for employees to become vaccinated, the EAP will not be considered to provide significant benefits in the nature of medical care. The EAP providing vaccination benefits will be considered an excepted benefit under applicable regulations if the EAP does not contain cost-sharing provisions and satisfies the other excepted benefit criteria listed above.

Additionally, benefits offered to employees at an on-site medical clinic are excepted benefits, including on-site clinics that administer COVID-19 vaccinations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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