Whether expressed as rewards or penalties, wellness program incentives have become important mechanisms for encouraging behaviors believed to be healthy — and therefore more likely to reduce group health plan costs. For years, tobacco users have faced group health plan premium surcharges if they failed to cease using tobacco products (and if they also failed to comply with reasonable alternatives, such as completing a smoking cessation program).
Due to the reluctance of some individuals to get the COVID-19 vaccine, many employers are considering offering wellness program incentives to employees for obtaining the COVID-19 vaccine. Along the same lines, some employers are also considering imposing premium surcharges for employees who choose to remain unvaccinated for COVID-19 because such employees create risks of higher group health plan costs.
Can Employers Implement a COVID-19 Premium Surcharge or Similar Wellness Program to Incentivize Participants to Get Vaccinated for COVID-19?
To implement a COVID-19 premium surcharge wellness program, an employer needs to comply with the wellness program rules set forth under the Health Insurance Portability and Accountability Act (“HIPAA’), the Americans with Disabilities Act (“ADA”), and the Genetic Information and Nondiscrimination Act (“GINA”), as well as related guidance from the Equal Employment Opportunity Commission (“EEOC”) regarding wellness programs.
Legal counsel with knowledge of employee benefit plans can help navigate the different rules and regulations, as well as related EEOC guidance, to help ensure that the employer’s wellness program complies with each applicable law.
2021 EEOC Proposed Regulations
On January 7, 2021, the EEOC proposed a new approach that may provide employers with some certainty, particularly as many employers are considering incentives to encourage employees to get vaccinated for COVID-19. The EEOC proposed regulations under the ADA and GINA, providing a brief history of wellness programs and the EEOC’s evolving position on these programs.
Under the ADA proposed rule, a wellness program is a program of health promotion or disease prevention that includes disability-related inquiries or medical examinations. Programs that do not include disability-related inquiries or medical examinations (e.g., rewarding employees for attending a smoking cessation class) would not be subject to the ADA proposed rule. The rule also would incorporate essentially the same subcategories of wellness programs as under the ACA/HIPAA rules — participatory and health-contingent.
The ADA proposed rule maintains the spirit of the EEOC’s basic position on voluntariness — allowing too high of an incentive would make employees feel coerced to disclose protected medical information. However, by modifying its earlier position on the ADA wellness plan “safe harbor”, the EEOC proposes to synchronize its position more closely with the ACA/HIPAA rules.
The proposed general rule on voluntary wellness programs – only de minimis incentive permitted.
The general rule for covered wellness programs under the ADA proposed rule is that employers may offer no more than de minimis incentives to encourage employees to participate. Such programs also may not:
- Require employees to participate;
- Deny employees access to health coverage under any of their group health plans, limit coverage under their group health plans for such employees except as otherwise permitted; or
- Take any other adverse action against employees who choose not to participate in the wellness program.
The “safe-harbor” exception to the de minimis rule.
The ADA’s proposed rule interprets the ADA’s statutory safe harbor provision to provide an exception to the proposed de minimis incentive rule. Specifically, health-contingent wellness programs that (i) are part of, or qualify as, group health plans and (ii) are subject to and comply with the applicable provisions of the ACA/HIPAA wellness rule may provide incentives that are more than de minimis, provided they are not greater than what is permitted under the ACA/HIPAA wellness rules.
The safe harbor exception does not extend to the ADA’s other requirements for voluntariness summarized above, only the maximum incentive level.
It is also important to note that the EEOC did not extend the safe harbor exception to participatory wellness programs.
In general, GINA prohibits employers from collecting “genetic information” from employees, subject to very limited exceptions. Some wellness programs provide incentives to an employee when his or her family member provides information about the family member’s own manifestation of disease or disorder. Under GINA, such information is considered genetic information of the employee, i.e., the employee’s family medical history.
As under the current GINA rules, the GINA proposed rule would not permit incentives in exchange for an individual’s own family history or genetic information (whether the employee or family members). There can only be questions about a family member’s manifested (or own current or past) health information, subject to certain additional rules.
In addition, the GINA proposed rule does not require that the wellness program be reasonably designed to prevent disease (but this is a HIPAA requirement for health-contingent programs).
Practical Considerations for Establishing a COVID-19 Wellness Program
In addition to working with legal counsel to ensure that an employer’s COVID-19 wellness program complies with all applicable law, employers also need to consider numerous implementation and administration issues, including but not limited to:
- What will be the amount of the premium incentive (or surcharge)?
- How does a vaccination incentive interact with other wellness incentives the employer offers?
- How long should plan participants have to get fully vaccinated?
- What proof will be required to establish vaccination?
- Is the vaccination requirement “participatory,” or is it “health-contingent”? If health-contingent, and considered “activity only,” what reasonable alternative standard will be made available should vaccination be medically inadvisable for the participant?
- What protections are in place for the handling of vaccination data under HIPAA?
Employers should consider what makes the most sense from an administrative perspective and confirm with appropriate legal counsel that the planned COVID-19 wellness program implementation and administration complies with applicable law.
Emily R. Langdon
This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.