Sept. 1, 2021
Delta Airlines made headlines this month by announcing that it will charge employees on its group health plan a $200 surcharge for failure to receive the COVID-19 vaccination. Although there is potential for conflict with a myriad of federal statutes — including the ACA, HIPAA, ADA, and GINA — this arrangement may be structured legally if done through a properly designed wellness program. This Alert is intended to assist employers in identifying the legal issues needed to be addressed when considering whether to implement a similar incentive program in their own workplace.
Both the Patient Protection and Affordable Care Act (“ACA”) and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) generally prohibit group health plans and insurers from using health factors to discriminate among similarly situated individuals, including the amount of premiums charged for coverage. Stated otherwise, the statutes do not allow employers to charge employees different premium amounts for group health coverage based solely on a single health factor, such as vaccination status.
HIPAA’s nondiscrimination regulations, first issued in 2006, include an exception, however, that allows group health plans and health insurance issuers to establish different premium amounts if individuals adhere to the terms of a qualifying wellness program. Health care reform codified these HIPAA regulations into the provisions of the ACA and applied them to group health plans effective as of the first day of the plan year beginning on or after Jan. 1, 2014.
A wellness program is defined under the regulations as a “program of health promotion or disease prevention.” Wellness programs that comply with the regulations may offer participants a “reward,” which can be in the form of something affirmatively received (e.g., a discount or rebate of a premium or contribution), or something avoided (e.g., a penalty in the form of a premium surcharge).
There are two types of wellness programs:
An employer adopting a wellness program with the reward based on the vaccination status of employees is a health-contingent wellness program and an activity-only wellness program. It is not a participatory wellness program, as the reward is conditioned upon the individual satisfying a standard relating to a health factor, but the individual is not required to attain or maintain a specific health outcome (it is possible that vaccinated individuals will still contract COVID-19).
A health-contingent wellness program that is an activity-only wellness program qualifies for the exception to HIPAA and ACA’s nondiscrimination requirement only if the following requirements are satisfied:
In the case of the COVID vaccine, this means waiving the requirement for individuals with a valid medical reason for bypassing the COVID vaccine, with such individual eligible to receive the reward regardless of vaccination status. If reasonable under the facts and circumstances, a plan may seek verification that a health factor makes it difficult or inadvisable for the individual to achieve the standard, such as a statement from the individual’s doctor.
To complicate matters further, in addition to the ACA and HIPAA, employers implementing a wellness program aimed at encouraging COVID vaccination amongst its employees must address the Americans with Disabilities Act of 1990 (“ADA”). In particular, employers offering wellness programs need to consider the two rules under the ADA prohibiting (1) discrimination based on disability, and (2) disability-related medical examination and inquiries. Assuming a waiver option is offered to employees medically unable to receive the vaccine, only the second rule is implicated by a wellness program focused on vaccination status.
Although the ADA prohibits disability-related medical examinations and inquiries, such prohibition is subject to two exceptions:
The Equal Employment Opportunity Commission (the “EEOC”), the federal agency tasked with enforcing the ADA, has published Q&As addressing this issue, explicitly stating that an employer may offer an incentive to employees to voluntarily provide documentation or other confirmation of a vaccination received; such a document request is “not a disability-related inquiry covered by the ADA.” Other requirements under the ADA for voluntary wellness programs include the following requirements:
The Genetic Information Nondiscrimination Act of 2008 (“GINA”) may also be implicated by wellness programs focused on employee vaccination, but only if the employer or its agent is responsible for administering the COVID-19 vaccinations and the incentive is offered on the basis of a family member’s vaccination status.
The EEOC has stated that there are no GINA compliance issues when an employer offers an employee an incentive to receive a COVID vaccination, regardless of whether the vaccination is administered by an independent third party of the employer or the employer’s agent. This is because the employer is only requesting proof of vaccination and not requesting genetic information. However, if the employer or the employer’s agent is administering the vaccine, GINA prevents the employer from offering an incentive to its employee on the basis of the employee’s family member’s vaccination.
As a result, it is best practice if the COVID vaccine is administered by an independent third party, with the employer merely requesting proof of vaccination. No GINA issues result from this arrangement.
This is a complicated legal issue, and employers interested in exploring the implementation of a wellness program should contact their legal counsel for additional guidance.
The Nelson Mullins Employee Benefits Group is ready to assist with questions or compliance steps. Please contact one of our Employee Benefits attorneys or the Nelson Mullins attorney with whom you work. For additional information on COVID-19 related issues, please visit the Nelson Mullins COVID-19 resource page.
These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.