The Departments of Labor, Health and Human Services, and the Treasury (the "Departments") recently issued a set of Frequently Asked Questions-FAQs About Affordable Act Implementation, Part 50, Health Insurance Portability and Accountability Act, and Coronavirus Aid, Relief, and Economic Security Act Implementation-confirming that employers may utilize group health plan coverage surcharges in compliance with the ACA and HIPAA, although Title VI, ADA, and GINA compliance-based questions remain. We wrote about premium surcharges here and discuss the additional guidance below.
- The New Guidance Squarely Endorses Surcharges
They Comply With the ACA/HIPAA Wellness Program Rules.
The FAQs make clear that a group health plan may use incentives (e.g., premium discounts or surcharges) for becoming fully vaccinated, provided that the incentive complies with the final ACA/HIPAA wellness program regulations. Because the incentive requires an individual to perform or complete an activity related to a health factor - in this case obtaining a COVID-19 vaccination - the Departments determined that the arrangement qualifies as an activity-only wellness program.
To qualify as an activity-only wellness program, the wellness program must, among other things, "be reasonably designed to promote health or prevent disease and must provide a reasonable alternative standard to qualify for the discount." The Departments offer as an example of an acceptable reasonable alternative standard an arrangement under which the program permits an individual to attest to following other COVID-19-related guidelines where it is unreasonably difficult due to a medical condition or medically inadvisable to obtain the COVID-19 vaccination. It also offers as an example where the program offers a waiver from the vaccination requirement. The employer must provide notice of the availability of the reasonable alternative standard under the wellness program, and it could insist in the written confirmation from the individual's physician that the individual qualifies for the alternative standard.
The Departments also affirmed that the incentive provided in connection with the vaccine program must not exceed 30 percent of the total cost of employee-only coverage and must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.
In a separate Q&A, the Departments made clear that neither a group health plan, nor health insurance issuer may condition eligibility for benefits or coverage on being vaccinated. This, according to the Departments, would result in a violation of the ACA/HIPAA rules that prohibit plans and issuers from discriminating against participants, beneficiaries, and enrollees in eligibility, premiums, or contributions based on a health factor. Under these rules, benefits must be uniformly available to all similarly situated individuals and any restriction on benefits must apply uniformly to all similarly situated individuals and must not be directed at individuals based on a health factor. The only exception to this general rule is for wellness programs, discussed above, that meet applicable federal standards.
- The New Guidance is Silent Regarding Whether a
Surcharge Complies with Applicable Anti-Discrimination Laws
We noted in our earlier post that the guidance on whether surcharges comply with anti-discrimination laws, including the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII), and the Genetic Information Nondiscrimination Act (GINA), was less than clear. The Departments' guidance does not take a position one way or the other. Instead, it refers the reader to the existing EEOC vaccination guidance (see Section K), which, currently, does not sufficiently address the issue. Hopefully additional guidance will be forthcoming. Thus, until such guidance is issued, and as we wrote previously: we recommend employers take a measured approach when designing and implementing any surcharge plans to ensure employees do view the vaccination requirement as voluntary, and further that they provide for medical and religious-based exemptions.
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