Background

The CARES Act requires non-grandfathered group health plans and health insurers to cover without cost sharing certain preventive services and immunizations that prevent or mitigate COVID-19. We discussed this requirement in our December 15, 2020 compliance insight, “Most Plans Must Cover COVID-19 Vaccine Without Cost Sharing.” The guidance addresses how these requirements apply to vaccines now authorized to prevent or mitigate COVID-19.

HIPAA prohibits plans and insurers from discriminating against participants, beneficiaries and enrollees in eligibility, premiums or contributions based on a health factor. There is an exception to this general prohibition, which permits a plan to offer incentives, including premium discounts, rebates or modification of otherwise applicable cost-sharing requirements in return for adherence with wellness programs. There are specific rules applicable to different types of wellness programs under HIPAA and the ACA. Plan sponsors have been interested in whether they can provide incentives to encourage participants to receive COVID-19 vaccines. The guidance speaks to how this can be done in a permissible manner.

The guidance

The guidance, issued as FAQs, clarifies the following:

• Plans and insurers must cover a new COVID-19 vaccine, without cost sharing, immediately after authorization of the vaccine under an Emergency Use Authorization (EUA) or Biologics License Application (BLA) from the CDC’s Advisory Committee on Immunization Practices.
• Plans and insurers may offer participants a premium discount for receiving a COVID-19 vaccine provided the discount satisfies the criteria for activity-only health-contingent wellness programs, which are listed in the box below. One of the criteria is that plans must provide a reasonable alternative for individuals for whom it is unreasonably difficult due to a medical condition or medically inadvisable to obtain the COVID-19 vaccination. The FAQs give examples of reasonable alternative standards, including that the wellness program may offer a waiver of the condition (due to medical inadvisability) or that the individual may attest that they are following other COVID-19-related guidelines for unvaccinated individuals.
• Eligibility for benefits or coverage to treat COVID-19 may not be conditioned on participants or beneficiaries being vaccinated. This would violate HIPAA’s prohibition on discrimination against participants and beneficiaries in eligibility, premiums or contributions based on a health factor.
• For purposes of determining whether employer-sponsored health coverage is affordable under the ACA, wellness incentives that relate to the receipt of COVID-19 vaccinations are treated as not earned.

Action items

Plan sponsors should ensure their COVID-19 vaccine policies and practices comply with this guidance.

The FAQs note that the Departments will only enforce prospectively the requirement to cover immediately, without cost sharing, any COVID-19 vaccine authorized under an EUA or approved under a BLA. In some cases, plans may need to be amended to reflect this requirement.

Plan sponsors may wish to consider if they would like to provide wellness incentives to individuals for receiving the COVID-19 vaccination. If they decide to do so, they should ensure that such incentives are offered through a program that complies with the HIPAA/ACA wellness program rules governing activity-only health-contingent wellness programs. In addition, other rules governing wellness incentives, such as those issued by the Equal Employment Opportunity Commission under the Americans with Disabilities Act should be reviewed.

Finally, employers should monitor guidance from the administration, including for federal contractors or under OSHA, to ensure that they meet other applicable standards concerning vaccination.