Predictions of rising medical plan rates are escalating as the need to ensure workplace safety and the costs associated with COVID-19 treatment continue to mount. The impact on company health insurance premiums can be astronomical—to the extent that the costs of plans could push some employers out of business.
What can companies do to minimize rising healthcare plan expenses?
A properly designed and developed wellness program that takes coronavirus vaccine status into account is one of the most effective solutions businesses can enact to help protect themselves from soaring medical plan costs. As the current situation becomes a “pandemic of the unvaccinated,” those inoculated against COVID-19 are largely seeing protections against severe illness, hospitalizations, and death—making higher premiums or a surcharge for those remaining unvaccinated a logical next step.
Such a program must comply with all Health Insurance Portability and Accounting Act (HIPAA) wellness program rules and reflect compliance with recent Equal Employment Opportunity Commission (EEOC) guidance related to vaccine accommodations.
Under a compliant program, an employer may condition an incentive in terms of the amount of employee premium contribution based on participation in a wellness program. Many employers are already familiar with such a system as it will resemble a smoking cessation program.
Here are the major requirements:
- Surcharge must comply with wellness incentive limits that consider existing incentives to 30% (up to 50% for tobacco surcharges) of the total cost of employee-only coverage. Adding a new incentive could cause a plan to exceed the limit, which would require reducing or modifying other incentives to allow for a vaccine-related incentive.
- Surcharge must allow employers to maintain compliance with the Affordable Care Act (ACA) Employer Mandate affordability rules. Non-tobacco-related wellness incentives must be treated as “not met” for purposes of determining ACA affordability. Adding a vaccine-related surcharge effectively increases the cost to employees and makes it more difficult to offer the coverage at an affordable contribution amount.
- Consider time-of-year plan deadlines and health plan rules. If implemented mid-plan year, will employees be able to opt out if they experience a significant cost increase?
- Make sure the wellness program follows state laws.
- With booster shots on the horizon, ensure your plan considers what the definition of “fully vaccinated” will mean.
Some employers have considered limiting group health plan coverage to those that are vaccinated or limiting health plan claims for COVID-19-related illnesses to only those that are vaccinated. These suggestions would clearly violate HIPAA non-discrimination rules, and therefore should be avoided.
A carefully administered plan that maintains compliance with governing laws will help ensure not only the wellness of your workforce, but of your business.
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