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.

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