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Delta’s decision to charge employees who remain unvaccinated against COVID-19 an extra $200 per month for health insurance has sparked many debates and raised many questions in the HR world. Can they do this? Is this legal? Is it even effective? Today, we’ll be discussing health wellness programs relating to vaccine incentives/penalties in the workplace.

Definition of Wellness Program

The Equal Employment Opportunity Commission (EEOC) describes “wellness programs” as “health promotion and disease prevention programs and activities offered to employees as part of an employer-sponsored group health plan or separately as a benefit of employment.” Basically, whenever an employer incentivizes its employees to participate in some health-related activity (like Delta’s unvaccinated surcharge), they’re developing a wellness program.

Lots of Legal Concerns!

Several different laws affect wellness programs. Conveniently enough (joking), all these laws affect different employee rights and may require different actions to ensure compliance. The most pressing laws to consider are the Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA), and Genetic Information Nondiscrimination Act (GINA). Too many acronyms, we know!

ACA & HIPAA Requirements

The ACA and HIPAA only applies to wellness plans than affect employees’ medical benefits (remember last week when we told you HIPAA only applies to employers in the context of administering employee medical plans?). Generally, the ACA and HIPAA prohibit group health plans from charging similarly situated individuals differently or imposing different deductibles and co-pay requirements. However, there’s an exception for wellness programs.

The ACA categorizes wellness programs as either “participatory,” meaning anyone can participate and qualify for the reward regardless of health status, or “health-contingent,” meaning that health factors could affect the employee’s ability to earn the reward. Participatory wellness programs are generally acceptable so long as all similarly situated employees have the same opportunity to participate in the program (think getting a benefit for undergoing some diagnostic testing or health assessment or reimbursement for gym memberships). Health-contingent programs are further broken down into activity-only programs and outcome-based programs. Activity-only programs involve things like attending fitness classes or getting a certain number of steps each day, and outcome-based programs involve things like quitting smoking or maintaining a certain body mass index.

The ACA imposes additional requirements on health-contingent wellness programs. Broadly speaking, the programs must at least satisfy the following conditions:

  • Eligible employees must have the opportunity to participate at least once per year.

  • The total reward cannot exceed 30% of the cost of employee-only coverage (including both employee and employer contributions).

  • It must be reasonably designed to promote health.

  • The full reward must be available to all similarly situated individuals, and individuals who cannot participate due to medical reasons must be provided a waiver or a reasonable alternative.

  • All materials describing the plan must include materials describing the terms of the program and the availability of a reasonable alternative.

A wellness program is reasonably designed to promote health and prevent disease if it has a reasonable chance of improving the health of or preventing disease in participating individuals, is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not a highly suspect method of promoting health or preventing disease.

The ACA requires that all employees be given the opportunity to earn the full reward offered by the wellness program regardless of their health status. This means that, for health-continent requirements, employers must provide employees the opportunity to earn the full reward regardless of their own personal health. Employees whose doctors verify they it is medically inadvisable for them to participate in the activity must be offered a reasonable alternative to earn the full reward.

ADA Considerations

The Equal Opportunity Commission (EEOC) enforces the ADA, and unfortunately, it hasn’t been overly helpful in providing guidance on vaccine incentives in the context of employee wellness plans (surprise, surprise). However, what the EEOC has said is that requesting documentation showing that an employee received a COVID-19 vaccination is not a disability-related inquiry covered by the ADA. So, as long as the employer isn’t the entity actually administering the COVID-19 vaccine (which would involve eliciting disability-related information), incentive programs that rest solely on the employee providing documentation showing they received the COVID-19 vaccine doesn’t trigger the ADA.

GINA Considerations

GINA issues don’t come up very often, so don’t sweat it if you’re not familiar with this law. GINA prohibits employers from requesting, requiring, or purchasing genetic information from employees and their family members in most situations. Wellness programs are an exception. That said, the EEOC has issued guidance that employers can offer an incentive for employees to provide documentation that their family members received a vaccination (from someone other than the employer) without violating GINA. Again, this changes if the employer is the one directly administering the vaccine.

How does this all affect vaccine incentive programs?

Based on guidance from the EEOC, so long as the employers aren’t the ones actually administering the vaccine, voluntary vaccine incentive programs that require employees to show proof of vaccination to qualify for a reward do not implicate the ADA. Voluntary incentive programs involving proof of vaccination for family members are likewise a-okay under GINA.

The tricky part is complying with the ACA and HIPAA. Whether vaccine incentives affecting group medical benefits are considered participatory or health-contingent wellness programs is still up in the air. Because the ability to receive a vaccine is arguably linked to one’s health status, it’s safer to consider them health-contingent programs. This means that the reward cannot exceed 30% of the cost of employee-only coverage, and employers must be able to show that the wellness program is reasonably designed to promote health and/or prevent disease—this should be easy to do with a COVID-19 vaccine incentive program. Employers must also provide alternatives or waivers for employees who are unable to receive a vaccine due to medial reasons. In this situation, employers can request certification from a medical provider that receiving the vaccine is medically inadvisable. Some HR professionals and employment lawyers have suggested testing requirements as a reasonable alternative. However, this could be costly, as the employer would be responsible for paying for such testing.

Assuming Delta is providing a reasonable alternative and/or waivers for those who are medically unable to receive the vaccine, and $200/month is less than 30% of the cost of employee-only coverage, it sounds like Delta has a good chance of showing that its plan to charge unvaccinated employees $200/month more for health insurance is an acceptable employee wellness program under the ACA. Time will tell if more companies decide to follow in its footsteps. Litigation on the issue is likely, so it’s only a matter of time before we get judicial guidance on the topic, as well.

Of course, having an attorney review the terms of your wellness plan is never a bad idea. We’re only a call or email away!

Thompson Coe and myHRgenius Tip of the Week is not intended as a solicitation, does not constitute legal advice, and does not establish an attorney-client relationship.


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Kevin M. Mosher

Kevin M. Mosher


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