Insurance Premium Surcharges for the Nonvaccinated

Wed September 22, 2021

ABMA logo 2016

The Food and Drug Administration (FDA) gave full approval to the Pfizer-BioNTech COVID-19 vaccine (now marketed as Comirnaty) for individuals 16 years of age and older On Aug. 23, 2021. As a result, many employers are exploring options related to COVID-19 vaccination status within their workforce, including whether to charge a premium surcharge for nonvaccinated individuals.

There are a number of legal considerations to take into account when determining whether to impose a premium surcharge (or offer an incentive) based on vaccination status. Subject to any specific state laws prohibiting this practice, employers may generally provide incentives to employees for receiving the COVID-19 vaccine (or penalize employees for failing to get vaccinated). However, this would likely need to be structured as a group health plan wellness program under existing law.

Employers that wish to impose a premium surcharge (or offer an incentive) based on COVID-19 vaccination status should carefully consider the compliance obligations related to this strategy. Because this would likely need to be structured as a wellness program, employers should become familiar with the legal requirements for wellness programs.

Employers may need to make exceptions to an incentive or penalties for employees who are unable to get vaccinated due to a disability or a strongly held religious belief. Treating those employees differently because of their lack of vaccination could potentially be discriminatory under the Americans with Disabilities Act (ADA) or Title VII of the Civil Rights Act.

Employers may wish to visit the final rule as issued by the Internal Revenue Service, the Employee Benefits Security Administration and the Health and Human Services Department on June 3, 2013.

This release is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.