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Employers Considering Higher Health Plan Premiums for Unvaccinated Employees

Delta Air Lines announced last week that it is implementing a $200 monthly health plan premium surcharge for employees who have not been vaccinated against COVID-19. Employers contemplating a similar move should be aware of a number of associated legal considerations. These considerations include the applicability of the HIPAA wellness program rules for health-contingent wellness programs, which require, among other items, (i) offering employees a reasonable alternative to vaccination that can be used to avoid the surcharge, and (ii) a total dollar cap on incentives/surcharges. In addition, there are implications for determining the health plan’s “affordability” for purposes of the ACA employer penalties. The ADA rules requiring “reasonable accommodations” may also apply. Government agencies have not yet provided specific guidance regarding vaccine surcharges under applicable laws, unlike the guidance already provided concerning vaccine mandates. Employers should consult with legal counsel before implementing a vaccine surcharge program.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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