On Oct. 4, 2021, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued FAQs addressing rules regarding premium incentives for COVID-19 vaccinations and rapid coverage of preventive services for COVID-19. The guidance also addresses the associated issues of determining affordability if a premium discount or surcharge if offered, the permissibility of coverage exclusions for unvaccinated individuals, and guidance for plans cover approved COVID-19 vaccines without cost-sharing under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
COVID Vaccine Premium Surcharges and Incentives
The guidance in FAQ three states that a group health plan (or health insurance issuer offering coverage in connection with a group health plan) may offer participants a premium discount for receiving a COVID-19 vaccination as long as the premium discount complies with the final HIPAA/ACA wellness program regulations. However, health plans generally may not condition eligibility for benefits or coverage on vaccination status.
The FAQs use the term “premium discount”, but obtaining a “reward” is considered to refer to both a discount and a way to avoid a penalty (e.g., a surcharge). Under these rules, a premium discount that requires an individual to obtain a COVID-19 vaccination would be considered an “activity-only” wellness program, which is a type of health-contingent wellness program. These programs must comply with the regulations’ five nondiscrimination criteria, listed below, which includes an incentive limit and a requirement to offer a reasonable alternative standard (RAS).
Five requirements for health-contingent wellness programs:
- The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.
- The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor is limited – generally, it must not exceed 30% (or 50% for programs designed to prevent or reduce tobacco use) of the cost of employee-only coverage under the plan.
- The program must be reasonably designed to promote health and prevent disease.
- The full reward must be available to all similarly situated individuals and therefore the program must allow a reasonable alternative standard (RAS).
- The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the otherwise applicable standard).
The maximum permissible reward (or penalty) under a health-contingent wellness program that is part of a group health plan is 30% of the cost of coverage which includes all wellness-related rewards, including a reward for receiving a COVID-19 vaccination. The following example was provided:
Example: A group health plan offers a 25% premium discount of the cost of employee-only coverage to all participants who receive a COVID-19 vaccination in accordance with the recommendations of ACIP (and does not offer any other reward under other health-contingent wellness programs with respect to the plan). To help facilitate participants receiving the vaccination, the plan also maintains a toll-free hotline to answer questions about COVID-19 vaccination and offer assistance to schedule appointments to receive a COVID-19 vaccination. The plan provides the same premium discount to individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain a COVID-19 vaccination if the individual attests to complying with the CDC’s mask guidelines for unvaccinated individuals. The plan also provides notice of the availability of this alternative to all participants. Participants may qualify annually for this premium discount.
Conclusion: The vaccine incentive program meets the criteria to be an activity-only health-contingent wellness program. The reward the plan provides in connection with the vaccine incentive program does not exceed 30% of the total cost of employee-only coverage and the opportunity to qualify is offered annually. The plan provides a reasonable alternative standard to qualify for the reward, in this case the opportunity to attest to complying with the CDC’s mask guidelines, to individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain a COVID-19 vaccination, and the plan provides notice of the availability of the reasonable alternative standard. This program is also reasonably designed to promote health and prevent disease (and is not a subterfuge for discriminating based on a health factor), as the program rewards individuals who obtain a COVID-19 vaccination, while the reasonable alternative standard is not overly burdensome, and is also designed to prevent infection with SARS-CoV-2, the virus that causes COVID-19. Further, the plan’s maintenance of a toll-free hotline to provide information about the COVID-19 vaccine and assistance with meeting the underlying standard (in this case, receiving a COVID-19 vaccination or fulfilling the reasonable alternative) are additional facts and circumstances demonstrating that the program is reasonably designed to promote health or prevent disease because they help ensure that the program is not overly burdensome.
The FAQs note that the guidance only addresses the HIPAA non-discrimination rules and does not address other employment laws or incentives offered by employers as part of workplace policies, therefore a premium discount that complies with the HIPAA/ACA wellness program rules may not necessarily be compliant with the EEOC/ADA provisions governing voluntary wellness programs.
Vaccine Coverage Without Cost Sharing
The guidance in FAQ one states that health plans and issuers must now cover COVID-19 vaccines and their administration, without cost sharing, immediately once the particular vaccine becomes authorized under an Emergency Use Authorization (EUA) or approved under a Biologics License Application (BLA) for the particular vaccine. The coverage must also be provided consistent with the scope of the authorization or approval of the particular vaccine, including any amendment regarding a booster dose or expansion of the covered age demographic for whom the vaccine is authorized or approved.
COVID Coverage Eligibility
The guidance in FAQ four states that a group health plan may not condition eligibility for benefits or coverage for otherwise covered items or services to treat COVID-19 on participants, beneficiaries, or enrollees being vaccinated as the HIPAA wellness regulations generally do not allow plans and issuers to discriminate against participants, beneficiaries, and enrollees in eligibility, premiums, or contributions based on a health factor.
Employer Mandate & Affordability
The guidance in FAQ five clarifies that wellness incentives that relate to the receipt of COVID-19 vaccinations are treated as “not earned” for purposes of affordability calculations under the ACA employer mandate, which could subject some employers to penalties.
For example, if the individual premium contribution under a COVID-19 vaccination wellness program was reduced by 25%, this reduction is disregarded for purposes of determining whether the offer of that coverage is affordable for purposes of assessing liability for the employer shared responsibility payment. On the other hand, if an individual’s premium contribution for health coverage under a COVID-19 vaccination wellness program is increased by a 25% surcharge for a non-vaccinated individual, that surcharge would not be disregarded in assessing affordability.
Nondiscriminatory wellness program incentives that affect premiums (whether through discounts, rebates, or surcharges) are treated as earned only if they relate exclusively to tobacco use. This means the affordability of a plan implements a surcharge for tobacco users will be determined based on the premium charged to non-tobacco users, however, if a wellness incentive is unrelated to tobacco use (i.e., penalty for non-vaccinated individual), the incentive is treated as unearned (premium rate will be determined assuming that each employee fails to get a vaccine).
For more information about these FAQs or to determine if your employee wellness program is compliant with these rules please reach out to your Hylant Health Strategist or a Hylant representative.