The recent FAQ guidance from federal agencies confirmed that employers who sponsor group health plans can provide contribution rate discounts to encourage employees to receive a COVID-19 vaccine provided that the plan complies with the rules governing “activity-only” wellness programs. In this post, we will cover “activity-only” wellness programs further and discuss other important considerations when implementing a health plan discount for vaccinated employees.
Wellness Program: Federal agencies released FAQ guidance on October 4, 2021 with some helpful answers. The Departments of Labor, Health and Human Services and Treasury together issued guidance stating that group health plans may offer plan members a discount for receiving a COVID-19 vaccination. This approach is permitted provided that the discount does not exceed 30% of the total cost of a member’s health insurance premium under HIPAA/ACA wellness program rules as an “activity-only” wellness program.
“Activity-only” wellness programs require an individual to perform or complete a health-related activity to obtain a reward, incentive or discount. This type of wellness program requires plans to give members an opportunity to qualify for the reward, incentive or discount at least once a year. Further, plan members who are unable to receive the vaccine due to a medical condition must be provided with alternative standards to receive the contribution discount. One example of alternative standards includes complying with the CDC’s mask guidelines for unvaccinated individuals, including wearing a face covering and socially distancing as recommended for unvaccinated individuals.
ACA Affordability: Group health plans that provide contribution discounts to vaccinated employees cannot take the discounted amount into consideration when determining its lowest-cost plan option under the Affordable Care Act (ACA) affordability regulations. This means that the contribution rate offered to non-vaccinated employees, rather than the discounted rate offered to vaccinated employees, must be used to assess a group health plan’s affordability under the ACA employer shared responsibility payment rules.
For example, in 2021 the maximum monthly employee contribution rate under the ACA affordability Federal Poverty Line (FPL) safe harbor is $105.51. In order to satisfy this FPL safe harbor rule in 2021 in connection with a contribution rate discount for vaccinated members, a plan cannot charge more than $105.51 per month in employee contributions for unvaccinated members.
Please note that different ACA affordability rules apply to wellness programs that offer discounts or impose surcharges related to tobacco use.
COVID-19 Treatment Coverage: Separate from contribution rate discounts for vaccinated employees, the guidance also confirms that a group health plan must provide coverage for COVID-19 treatment to all plan members regardless of vaccination status and cannot deny coverage for COVID-19 treatment to unvaccinated plan members.
Risk Strategies is committed to keeping our clients informed. This post is informational only and should not be construed as legal advice. Please consult with your legal counsel if you have any additional questions.