Vaccine Premium Differentials Are Permissible Under Wellness Plans and No Cost Shares Allowed for Authorized Vaccines and Boosters

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A recently published FAQ prepared by the Departments of Labor, Health and Human Services and Treasury answers frequently asked questions regarding vaccine premium differentials and HIPAA nondiscrimination rules, as well as the cost shares for vaccine boosters.

Vaccine Premium Differentials

ERISA and other regulations prohibit plans “from discriminating against participants, beneficiaries, and enrollees in eligibility, premiums, or contributions based on a health factor.” Health plans are allowed an exception to this prohibition and may provide discounts, subject to limitations, to participants who adhere to the requirements of wellness programs. The maximum reward (or penalty) under a wellness program that is part of a group health plan is 30 percent of the cost of coverage (or 50 percent for wellness programs designed to prevent or reduce tobacco use).

The FAQ outlines that health plans may offer participants a premium discount for receiving, or surcharge for not receiving, a COVID-19 vaccination, if the discount complies with the five criteria of wellness program regulations. Those five criteria are:

  1. The wellness program must give the opportunity to qualify for the reward at least once per year.
  2. The reward, together with the reward for other health-contingent wellness programs, must not exceed 30 percent, or 50 percent for wellness programs designed to prevent or reduce tobacco use, of the total cost of employee-only coverage under the plan.
  3. The program must be reasonably designed to promote health or prevent disease.
  4. The full reward must be available to all similarly situated individuals, which includes allowing a reasonable alternative standard, or waiver of the otherwise applicable standard, for obtaining the reward for any individual for whom it is unreasonably difficult due to a medical condition or medically inadvisable to satisfy the otherwise applicable standard, for the relevant period.
  5. The plan must disclose in all plan materials describing the terms of the program, the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of a waiver), including contact information for obtaining a reasonable alternative standard and a statement that recommendations of an individual’s personal physician will be accommodated.

The FAQ also clarifies that health plans may not condition eligibility under a health plan on whether an individual obtains a COVID-19 vaccination. In addition, the FAQ clarifies that wellness incentive reductions are disregarded in determining affordability under the ACA, but wellness incentive increases are not, which means that employers should ensure that the premium differential does not make their coverage unaffordable under the ACA.

No Cost Sharing for Vaccines and Additional Doses

The CARES Act requires health plans to cover, without cost-sharing requirements, any qualifying coronavirus preventative service. “Qualifying coronavirus preventative service” means an “item, service, or immunization that is intended to prevent or mitigate coronavirus disease 2019” and includes items with an “A” or “B” rating in the current recommendation of the United States Preventive Services Task Force or an immunization recommended by the Advisory Committee on Immunization Practices of the CDC.

The FAQ clarifies that health plans must immediately cover vaccines and any additional doses, without cost sharing, once a vaccine becomes authorized, dating back to December 12, 2020.

The entire FAQ can be found here.

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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