COVID-19 Vaccinations: Employer Strategies and Considerations

Now that COVID-19 vaccinations are readily available to all but young children, more employers are looking to encourage, and in some cases mandate, employees and their family members to get vaccinated.

There is certainly flexibility for employers to do so, but employers need to be aware of certain compliance requirements that may apply depending upon what type of policy the employer implements.

Mandatory Vaccination Policy

Employers are generally permitted to require vaccinations so long as a reasonable accommodation is offered to those with a disability (in accordance with the Americans with Disabilities Act (ADA) or religious-based objection to receiving the vaccine). You can see more guidance on this from the EEOC in subsection K.

For employers considering a mandatory vaccination program for employees, we recommend also discussing the details of the program with HR/employment law counsel to discuss any specific restrictions on how the information can be collected, used, and stored.

There may be additional considerations if the information is asked as part of the hiring process. Employers should also discuss with counsel any consequences the employer wishes to impose on those employees choosing to remain unvaccinated (e.g., not being able to work onsite, reduction in pay, termination of employment, etc.).

Please note: There are a few states which have passed regulations that prohibit discrimination in the workplace tied to vaccination status. In such states, a mandatory policy may be prohibited completely.  California does not currently have any regulations or proposed legislation that would prohibit this.

Incentives or Surcharges (Wellness Programs)

Employers are generally allowed to provide incentives to employees who obtain the COVID vaccine or impose a penalty/surcharge on those who choose not to be vaccinated so long as the employer is not overly aggressive with the amount of the incentive or penalty. It may also be necessary to provide an alternative or an accommodation to those who cannot participate due to health status or a disability.

Providing an incentive or imposing a penalty/surcharge is a type of wellness program likely subject to wellness rules set forth under HIPAA nondiscrimination rules. In addition, depending upon who administers the vaccination, the program may be subject to EEOC wellness rules.

  • Under HIPAA wellness rules, whether the incentive is tied to the employer’s group medical plan or not, the conservative approach is to follow HIPAA rules because the vaccine program itself is likely a group health plan.
    • In addition, providing an incentive for obtaining a vaccine might be considered health-contingent, rather than merely participatory, since health status may prevent some individuals from participating and earning the incentive (e.g., immunocompromised, pregnancy, allergies, etc.). However, so long as the employer: (i) offers a reasonable alternative standard or waives the requirement for those who cannot participate due to health status and provides notice of the availability of a reasonable alternative standard; and (ii) limits the incentive to no more than 30 percent of the cost of health coverage, it should be okay under HIPAA wellness rules.
    • NOTE: The 30 percent incentive limit would also need to take into account other wellness incentives provided by the employer. Finally, keep in mind that if the vaccine program is itself a group health plan, then HIPAA privacy and security requirements may apply as well, which could limit how the information collected may be used or disclosed.
  • Under EEOC wellness rules, the most recent EEOC guidance indicates that if the vaccine is obtained from a third party unrelated to the employer (which is how most individuals are obtaining a vaccination today), it may not be subject to the EEOC rules at all, in which case a reasonable accommodation is not required and there is broad flexibility for the employer to provide an incentive as desired. However, if the employer coordinates an onsite vaccination clinic, then it may be necessary to follow EEOC wellness rules, including providing confidentiality notices, limiting incentives to “voluntary” levels, and providing reasonable accommodations to those who cannot participate due to a disability.

Eligibility and Coverage Exclusions/Limitations

While mandatory vaccination policies and incentives or surcharges tied to vaccination status in the form of a wellness program are generally permitted, we recommend that employers do not condition eligibility or group medical plan coverage levels based on vaccination status.

HIPAA nondiscrimination rules broadly prohibit discrimination based on health status or a health factor (see Treas. Reg. §54.9802-1(b)(1)) will not allow the plan to deny eligibility for those who have not received the COVID vaccination. Under HIPAA rules, “receipt of healthcare” is considered a health factor. Vaccinations are likely a health factor and subject to HIPAA nondiscrimination rules because the individual receives health care in the form of the vaccine. Therefore the employer should not exclude individuals from participating in the employer’s group medical plan or limit coverage levels (e.g., for COVID-related treatment) for employees or their family members who are not vaccinated.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept  liability  for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.


About Michelle Cammayo

Michelle Cammayo has more than 13 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She also oversees the Compliance Department at Bolton & Company to ensure we are helping our clients manage and eliminate risk with regards to employee benefit compliance.

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