Reduced Health Benefit Premium
Three federal agencies have issued guidance indicating that employers may legally offer a reduced health benefit premium to employees who are vaccinated for COVID-19.
However, employers must comply with federal wellness program regulations. The Departments of Labor, Health and Human Services, and Treasury addressed the issue in a Frequently Asked Questions (FAQs) document. The FAQ explains that since wellness programs are designed to promote health or prevent disease, they are allowed to offer a reward for completing an activity related to health. Therefore, a premium discount that requires an individual to perform or complete an activity, such as obtaining a COVID-19 vaccination, would be considered part of a wellness program.
However, the reward can’t exceed 30% of the total cost of employee-only coverage, and the plan can require that participants qualify annually for this premium discount.
In addition, employers must provide a reasonable alternative for certain employees who find it unreasonably difficult to get the vaccine to qualify for the discount. According to the FAQ, employees who would qualify for a waiver would include those who have certain medical conditions or for whom it is medically inadvisable to obtain the COVID-19 vaccination. For instance, the plan could mandate that the employee comply with the CDC’s mask guidelines for unvaccinated individuals.
The plan also must maintain a toll-free hotline to provide information to employees about the COVID-19 vaccine. The hotline also must include information about how to receive a COVID-19 vaccination or how to fulfill the requirements for the alternative.
What an employer offering a plan can’t do is discriminate against participants, beneficiaries, or enrollees in determining eligibility for benefits or coverage based on getting the vaccination.
Also, employers may not deny employee benefits coverage based on whether an employee obtained a COVID-19 vaccination.
Copyright © 2020 Smarts Publishing
About the Author
Share This Story
Related Blogs
Trump Administration Reshapes Health Plan Oversight
The Trump administration has issued a series of executive orders aimed at recalibrating federal oversight of employer-sponsored health plans. These directives target unpublished rules and agency enforcement priorities, signaling a shift toward deregulation and increased flexibility for plan sponsors.
Compliance Update: Gag Clause Attestations, Contraceptive Coverage Ruling, and SF Ordinance Impacts
As Q4 begins, benefits managers face a trio of compliance developments with implications for plan design, documentation, and year-end filings. Two are federal in scope, while one local ordinance continues to affect employers nationwide.
Benefits Administration Update: MLR Rebates, Texas SB 1332, and Year-End Priorities
As the final quarter of 2025 begins, several developments in benefits administration are reshaping how employers manage compliance, coverage, and communications. From rebate distribution rules to state-level legislation, benefits managers should take note of key updates that may affect plan operations and documentation heading into year-end.