Employers considering whether to follow Delta Air Lines’ lead and fines their unvaccinated employees could charge an unlimited amount depending on the type of wellness plan they choose.
The airline said this week that it will be introducing a $ 200 monthly health premium premium for employees who haven’t received the Covid-19 vaccine by Nov. 1, according to recruiters and others, who work with health insurance matters.
Delta’s move came in the wake of the full approval of the Pfizer BioNTech vaccine by the Food and Drug Administration and as Covid cases and hospital admissions have increased dramatically in recent months due to the highly transmissible Delta variant. Every hospital stay is associated with significant costs for the employer. The airline said the average hospital stay for Covid-19 cost them $ 50,000 per person.
“Federal labor law generally allows employers to prescribe a Covid vaccination or to encourage employees to vaccinate,” said Karen Pollitz, Senior Fellow of the Kaiser Family Foundation, in an interview. Under the Security of Retirement Income for Workers Act and Affordable Care Act, employers cannot charge their employees higher premiums for health services based on health status, but wellness incentives are an exception to these general non-discrimination rules, she said.
Every group health insurance plan, whether self-financed or fully insured, has the ability to use health incentives to vary the premiums for health care benefits based on vaccination status, said Pollitz, who recently wrote an article on what employers can do to oblige or oblige employees encourage them to get a Covid vaccine.
Delta didn’t respond when asked if the surcharge was part of a wellness plan.
Wade Symons, national head of Regulatory Resources Group and employee benefits attorney at Mercer benefits consultancy, said some employers are not happy with vaccine mandates, and that’s where bonuses come in. “You want to at least give the appearance of an employee’s choice.” he said.
Type of wellness plan
An important question to be answered by employers looking to follow Delta’s model is whether they charge surcharges as part of a health plan or an attendance-only wellness plan, Symons said in an interview.
Health-related wellness programs usually require participants to achieve a specific health goal in order to receive a reward. No reimbursement or reward may be made dependent on a health outcome for an attendance-only plan.
If a supplement based on vaccination status was viewed as a health-related wellness program – “which I am sure some out there think should fall here” – there would be a 30% cap on employee-only premium costs called Symons. This would be based on the full cost that the company and employee pay for the premiums.
For example, if the company’s full premium cost for insurance coverage for employees only is $ 500 per month, the surcharge would be limited to the 30% limit of $ 150 per month.
However, if it is a participation-only plan, the supplements can be unlimited. That’s because employees who didn’t get vaccinated would not attend and potentially pay a surcharge beyond the 30% limit, Symons said.
“It is up to the employer to interpret whether one or the other applies,” said Symons.
The distinction is important. “If you are looking at a high surcharge that could exceed that 30 percent limit, you need to be sure that our interpretation is that this is just participation versus a health quota,” he said.
The Department of Labor has put in place a compliance framework under the Health Insurance Portability and Accountability Act and the Affordable Care Act to enable employers to offer voluntary wellness programs with incentives or surcharges and avoid discrimination issues, Symons said.
“However, neither the DOL regulations nor the courts have given employers any guidance as to whether vaccination is considered just participation or health-related,” he said. “So employers have to make this decision themselves and weigh the risk of non-compliance.”
The government could impose an excise tax of $ 100 per day per affected participant for non-compliance, and both the government and staff could file lawsuits to enforce the rules, Symons said.
More than 50 companies
Mercer said it had spoken to more than 50 companies about surcharges. The company did not want to say whether it had advised Delta on the matter.
“I’m pretty sure a number of employers will move from the discussion phase to the action phase, knowing that other employers are doing this now and are obviously comfortable with the legal and labor considerations,” said Symons.
He described the increase in discussions with employers since Delta’s announcement on August 25th as “significant”.
Some employers want to increase contributions modestly to encourage employees to get vaccinated, Symons said. “Others see the surcharge as an opportunity to offset high damage costs that people with unhealthy behavior are likely to incur.”
Employers considering additions of $ 25 to $ 50 per paycheck generally fall into the former category, while those who weigh a “much higher” allowance are more likely to fall into the latter category.
“If you are trying to settle potential $ 50,000 Covid claims, you will likely need a significant surcharge. But we don’t see most employers thinking that way, ”said Symons.
Employers considering a health insurance surcharge for unvaccinated employees should consider the impact on low-wage workers, Julie Stone, general manager of health and benefits at consulting firm Willis Towers Watson, said in an interview.
“This is likely to put low-wage workers at a disadvantage,” Stone said. She said 22% of people in households with incomes below $ 25,000 were unvaccinated, compared with just 10% of people with household incomes of $ 100,000 and above.
Other companies will “likely be watching and seeing the negative impact on Delta,” said Mark Cunningham-Hill, medical director of the Northeast Business Group on Health, of the surcharge. The NBGH, which represents employers on health insurance issues, has approximately 170 member companies covering 6 to 7 million people in New York, New Jersey, and Connecticut.
The main concern is the loss of employees in the tight labor market, he said.
“Delta is ahead of the curve here.”