Delta Air Lines announced on Aug. 25 it is imposing a substantial health premium surcharge—$200 per month—on its unvaccinated employees, making it one of the first big U.S. employers to do so. Other companies are also considering such surcharges, similar to those imposed on smokers. Delta, which is self-insured, said its surcharge was intended to cover the added costs of caring for hospitalized workers who contract COVID-19.
The airline stopped short of instituting an outright mandate that employees get vaccinated, as rival United Airlines and several other big-name employers recently did, with exceptions based on health issues or religious beliefs.
Unvaccinated Delta employees will face other restrictions, including indoor masking effective immediately and weekly COVID-19 tests starting Sept. 12, the airline said.
Some benefits experts defend premium surcharges for unvaccinated workers as legally acceptable within certain parameters. Others express doubts about the practice, and it may ultimately fall to the courts to rule on the matter. Federal agencies such as the Equal Employment Opportunity Commission (EEOC) may also decide to issue guidance. In the meantime, Delta Air Lines and, most likely, other employers are going forward with premium differentials.
SHRM Online has collected the following articles on health plan surcharges for unvaccinated employees.
A 'Necessary' Surcharge
Delta CEO Ed Bastian said in a memo to employees, "Beginning Nov. 1, unvaccinated employees enrolled in Delta's account-based health care plan will be subject to a $200 monthly surcharge. The average hospital stay for COVID-19 has cost Delta $50,000 per person. This surcharge will be necessary to address the financial risk the decision to not vaccinate is creating for our company. In recent weeks since the rise of the B.1.617.2 variant, all Delta employees who have been hospitalized with COVID were not fully vaccinated."
He added, "If you aren't fully vaccinated, I strongly urge you to discuss the issue with your personal physician or health provider."
(Delta News Hub)
No Sick Pay Due to COVID-19 for Unvaccinated
By the end of September, Delta Air Lines warned that it will provide pay protection for missed time due to COVID-19 only to fully vaccinated employees experiencing breakthrough infections.
After Delta announced its new policy on Aug. 25, the number of employees receiving their first COVID-19 shot tripled compared with the typical daily rate, the airlines' chief health officer said.
(The Wall Street Journal)
Surcharges May Be in Store for the Unvaccinated
To date, employers have offered gift cards, a day off from work, cash and other financial incentives to convince their workers to get vaccinated against COVID-19. But the carrot approach is about to be joined by the stick of higher premiums.
The amount of the surcharge being discussed with most of these employers is akin to the $20-to-$50-a-month charges companies already impose on workers who smoke.
Poll: 41% Support Higher Insurance Rates for Unvaccinated Workers
When asked about whether unvaccinated employees should pay higher insurance rates, a large share of workers (41 percent) are supportive, based on a poll conducted Aug. 8 to 11, 2021, with responses from 1,010 employees across the U.S.
Generation Z workers were least supportive of higher insurance rates (23 percent), while Baby Boomers were most supportive (45 percent).
The 2021 Eagle Hill Consulting COVID-19 Vaccines and the Workplace Survey also found 60 percent of workers support employers offering incentives to vaccinated employees, and nearly two-thirds (63 percent) support employers instituting precautions for unvaccinated employees.
Employees are evenly split as to whether employers should mandate vaccines before workers return to the workplace.
(Eagle Hill Consulting)
Insurance Surcharge vs. Vaccine Mandates
Insurance surcharges could turn out to be more effective than mandates, said Denise Rousseau, professor of organizational behavior and public policy at Carnegie Mellon University's Heinz College.
"People are loss-sensitive," Rousseau said. "Losses are more painful than gains are good. If the incentives are experienced as a loss, they'll act to correct that loss."
The High Cost of COVID-19 Care
Getting hospitalized with COVID-19 in the U.S. typically generates huge bills. Those submitted by COVID-19 patients to the NPR-Kaiser Health News Bill of the Month project include a $17,000 bill for a brief hospital stay in Marietta, Ga., a $104,000 bill for a 14-day hospitalization in Miami and possibly hundreds of thousands for a two-week hospital stay in Hawaii—some of it on a ventilator.
More than 97 percent of hospitalized patients last month were unvaccinated. Though the vaccines will not necessarily prevent employees from catching the coronavirus, they are highly effective at ensuring individuals will have a milder case and are kept out of the hospital.
(The New York Times)
Questions Employers Should Ask
Employers considering a health plan premium surcharge for plan participants who remain unvaccinated have some issues to consider in structuring the program, such as:
- How much will the surcharge be?
- How does a vaccination surcharge interact with other wellness incentives the employer offers?
- Will the surcharge apply only with respect to employees who remain unvaccinated? What about spouses and dependents?
- How long should plan participants have to get fully vaccinated?
- What proof will be required to establish vaccination?
- Is the vaccination requirement "participatory," or is it "health-contingent"? If health contingent, and considered "activity only," what reasonable alternative standard will be made available should vaccination be medically inadvisable for the participant?
- What protections are in place for the handling of vaccination data and, in some cases, medical data supporting a reasonable alternative standard, all of which constitute protected health information under HIPAA [the Health Insurance Portability and Accountability Act]?
(Jackson Lewis via SHRM Online)
A Cautious Note
Since the passage of HIPAA in 1996, insurers may not discriminate against individuals for plan eligibility, premiums or coverage based on a health-related factor. The passage of the Affordable Care Act (ACA) in 2009 went even further: Insurers cannot vary premiums based on health status, gender, race or disability, among other factors.
Louise Norris, a health insurance reporter and writer, said it would be hard for insurers to get around these legal regulations to implement discriminatory pricing policies. "I can't think of a way that they could single out groups of employees who weren't vaccinated and target them for higher premiums," Norris told Verywell.
Historically, the one exception to this rule is the case of smokers. Under the ACA, insurance providers can legally charge higher rates for smokers than for nonsmokers as a way to disincentivize smoking.
As an alternative, Norris said, it's possible that some employers may offer insurance cost reductions for workers who are vaccinated, like lower monthly premiums or discounts on deductibles.
Premium Differentials Via Wellness Programs
Imposing a premium differential between vaccinated and unvaccinated covered employees and family members is doable, but likely creates a group health plan wellness program, which implicates both HIPAA (under rules issued by the Department of Health and Human Services), as well as the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act (under rules issued by the EEOC).
Employers should also be cautious of how they structure the program considering collective bargaining obligations, HIPAA privacy concerns and Section 125 requirements for midyear implementations.
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