Recently, Delta airlines made headlines. I’m sure your know why! It revealed employees enrolled in its health plan would have to pay a $200 surcharge, if they didn’t get the COVID-19 vaccine.
This decision caused a lot of conversation, and many employers found themselves asking if they could implement that too.
The quick answer is yes. Employers can charge these employees more to be a part of their health plan – but it’s a complicated issue.
Health contingent program
The best way to approach making a policy like this? Treat the surcharge as a health contingent wellness program, says employment law attorney Lyndsey Barnett of the firm Graydon Head & Ritchey LLP. Legally, this is the safest way to proceed.
To be compliant, a health contingent wellness program must meet a number of requirements.
- The surcharge amount can’t exceed 30% of the cost of single coverage. Using the Delta surcharge as an example, an employer could charge unvaccinated employees $200 if the cost of your health plan (including employee and employer contributions) is $600 or more. It’s important to remember any rewards given to employees – for example, for obtaining certain health metrics – count toward the 30% limit.
- You must offer a reasonable alternative to avoid the surcharge. Some employees are going to have medical conditions that make it difficult for them to receive the COVID-19 vaccine.
You can ask these employees to get confirmation from their doctor in order to avoid the surcharge. It’s a good idea to extend this to those refusing the vaccine for sincerely held religious beliefs.
There’s another stumbling block for large employers (50 or more employees). Under the ACA, large employers are required to provide affordable health plan coverage.
To determine if your health plan is affordable, use the regular cost plus the surcharge. This also goes for vaccinated employees who wouldn’t pay the surcharge.
Offering an affordable plan under the ACA’s requirements is difficult, so a surcharge might not be realistic.
A surcharge for unvaccinated workers could be a very effective strategy to increase vaccination rates in your workplace. But it must be implemented very thoughtfully to avoid legal issues and penalties.