DOL, Treasury, and HHS Guide to Collecting COVID Premium Insurance Incentives


On October 4, 2021, the U.S. Department of Labor, Treasury and Health (the Tri-Agencies) issued guidelines on the application of the Health Insurance Portability and Accountability Act (HIPAA) to vaccination-related premium surcharges and discounts, clarifying that Employers may request bonus incentives for vaccines if they meet the requirements of activity-only health programs.

Employers are increasingly keen to explore incentives designed to increase COVID-19 vaccination rates among employees. Some employers have announced that they will charge unvaccinated workers higher health insurance contributions than vaccinated workers, while others have considered other options, such as more generous plan options for vaccinated workers.



HIPAA generally prohibits a group health plan from discriminating between people in a similar situation based on a health factor. However, there is an exception for “wellness programs”. In the previous consultation, the tri-agencies distinguished between two types of wellness programs: participative and health-related Wellness programs.

  • A program is considered “Participating” if none of the conditions for receiving a reward under the program are based on an individual meeting a standard for a health factor.

  • A program is considered “health related” when it requires a person to meet a standard on a health score in order to receive a reward (or requires a person to do more than one person in a similar situation based on a Health factor to undertake to get the same reward). Health-related programs are divided into two types of programs: activity-based and results-based programs.

There is no maximum dollar limit on participating wellness programs; However, health-related wellness programs are subject to an incentive limit of 30% (ie, the premium must not exceed 30% of the insurance costs, which can be up to 50% if smoking cessation programs are included). The wellness program must also provide an Appropriate Alternative Standard (RAS) to employees under certain circumstances (ieif a medical condition makes it inappropriately difficult for the person to meet the standard or if it is medically inadvisable for the person to meet the standard). Some employers hypothesized that the premium surcharge for non-vaccinated plan participants is a participatory wellness program. The tri-agencies disagreed.

1. Premium surcharge / discount

In the new guidelines, the tri-agencies take the position that bonus incentive programs for vaccines are only activity-based programs. The tri-agencies point out that receiving the vaccine is a “health factor” that triggers the more restrictive conditions to meet the HIPAA exemption.

For example, the tri-agencies stipulate that a bonus incentive for vaccines may be permitted under HIPAA, but only if it meets the five criteria of the HIPAA wellness regulations. The criteria include (among others):

  • The program is reasonably designed to promote health or prevent disease. (In one example in the new guideline, the employer provided a toll-free hotline to answer questions about the vaccine and help set up an appointment.)

  • For those who have an illness that makes it unreasonably difficult or medically inadvisable to receive the COVID-19 vaccination, an appropriate alternative must be made available in order to receive the reward. (In one example in the new guidelines, the sensible alternative is for the person to provide a certificate stating that they are following the Centers for Disease Control and Prevention (CDC) masking guidelines for unvaccinated individuals.)

  • The premium (when added to all other wellness incentives for health quota programs) may be 30% of the total cost of the employee-only insurance (or, if a loved one can also earn the incentive, the cost of the coverage that the employee and dependents are in) registered).

Note that the HIPAA wellness rules allow the plan to require a medical certificate as to whether the COVID-19 vaccine is medically inadvisable.

2. Refusal of benefits or insurance coverage

The new guidelines state that HIPAA does not allow participants to be vaccinated to receive benefits or coverage for otherwise insured items or services (including those for the treatment of COVID-19), as this would prevent these participants from doing so because of a health factor would discriminate and the exception for wellness programs would not apply.

3. IEffects on the affordability of the employer mandate

The tri-agencies’ new guidance addresses how premium incentives for COVID-19 vaccines affect the affordability of an offer of employer-sponsored coverage for the purposes of the employer mandate of the Affordable Care Act (ACA). Similar to other non-tobacco premium incentives, vaccination incentives increase the cost of coverage for employer’s mandate purposes. That is, if the incentive is a premium discount, the discount is treated as not earned; thus, the ACA affordability is based on the assumed increased premium costs for the subscriber. If the incentive is a premium surcharge, the surcharge is also treated as if it applies to everyone; thus affordability is based on the assumed increased premium costs.


The US Equal Employment Opportunity Commission (EEOC) has issued a number of FAQs on when employers can apply for or require COVID-19 tests or vaccines. the Frequently asked questions from the EEOC from May 2021 provide that the ADA wellness rules do not apply if the employer only requires proof of a COVID-19 vaccination, as this is not a medical examination or an examination related to a disability. However, an employer must provide reasonable accommodation to an employee who is unable to receive the vaccine because of a disability (or religious belief, as described in Title VII). However, if the employer instead gives the vaccine directly or through an agent, the pre-screening questions constitute a disability-related exam that is subject to the ADA. In this case, incentives are only permitted if they are not so significant that they are “compulsory”.

With regard to the Genetic Information Nondiskrimination Act (GINA), the EEOC FAQs provide that an incentive to vaccinate a family member is generally permissible and no incentive limits apply as long as the family member receives the vaccine from a third party and not from the employer or his agent . An employer has no right to incentivize an employee to have a family member receive the vaccine from the employer or their representative.


The new guidelines from the tri-agencies answer a frequently asked question for employers and make it clear that they can impose bonus incentives on vaccines if they treat them as health-related programs for activity only. Employers and sponsors of group health plans considering introducing vaccination rewards incentives should ensure that they meet all of the activity-only health program criteria in the HIPAA wellness regulations and include vaccination rewards in their ACA affordability calculations.

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