Are Insurance Surcharges Employee-Approved?

Many organizations have begun implementing insurance surcharges as a replacement for vaccine mandates in hopes of achieving higher vaccination rates. Surcharges are similar to wellness incentives in that they offer incentives for employees to get vaccinated as opposed to forcing an ultimatum. Surcharges seem to be on the rise, but what exactly do they entail? Find out what employees think about these insurance surcharges and whether they can be an effective solution for your organization.

What Are Insurance Surcharges?

According to Forbes and health benefits consultancy Mercer, employers have been considering an additional insurance surcharge for unvaccinated employees since August. ​​These surcharges should incentivize employees to receive the vaccine voluntarily.

One example of this is Delta Air Lines. Beginning September 12, 2021, Delta has required employees to follow strict guidelines, including requiring all employees who are unvaccinated to wear a mask at all times while indoors. They must also submit to weekly tests and show proof of a negative result. 

Then, on November 1, 2021, Delta decided to adjust this policy. Employees who remained unvaccinated would be required to pay an additional $200 each month to stay on Delta Air Line's healthcare plan. According to Delta, these extra charges were necessary for handling the financial stress of keeping these unvaccinated workers on the group health plan.

Do Employees Support These Surcharges?

An Eagle Hill Consulting survey conducted this past January shows that 47% of all participants believe that unvaccinated employees should be subjected to increased insurance rates. It is also important to note that the numbers are trending upward. This is an increase from 41% back in August of 2020.  

Additionally, a Qualtrics survey in November 2021 showed 55% of employees would report a colleague for defying vaccine mandate requirements. The survey also noted that 52% of unvaccinated employees would be even less likely to get vaccinated should a mandate be implemented. The survey also states that 75% of unvaccinated participants claimed they would quit their jobs before submitting to enforced vaccination policies. Further, only 12% of unvaccinated workers claimed that fear or risk of losing their job would further incentivize them to receive the vaccine. 

Interestingly, vaccinated peers seem to support vaccine mandates, while those who are unvaccinated remain largely adamant in their position to refuse a vaccine regardless of the measures put in place. 

Given that the entire purpose of a mandate is to pressure the unvaccinated to become vaccinated, it is safe to say that this may not be the best method for success. Beyond this, the Supreme Court blocked Biden's latest vaccine mandate. This means employers would be required to implement their own vaccine mandates or look to alternatives. Based on the information at hand, we can only conclude that surcharges are set up for continued growth as an effective alternative for boosting vaccination rates. 

How Do Insurance Surcharges Differ From Wellness Plans and Incentives?

Wellness incentives differ from surcharges in that—while surcharges penalize those who refuse the vaccine—wellness incentives reward those who receive it. It is a step toward positive reinforcement and away from negative consequences. That said, both wellness incentives and surcharges can be effective. Common wellness incentives include: 

• Reimbursements on gym memberships
• Reduction of monthly health insurance premium upon receiving a flu shot
• Extra paid time off
• Increased employer contributions added to HRA or HSA
• Lower deductibles

Wellness plans work best as part of a long-term effort to curb employee health issues and concerns. At the same time, surcharges may prove to be a more effective strategy for high priority concerns such as improving vaccination rates or preventing a potential outbreak. 

Do Surcharges Pose Compliance Concerns?

Generally, group health plans are not allowed to charge similarly situated individuals different premium amounts based solely on the health of the individuals—which would be a violation of the Health Information Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA). However, there are exceptions to this rule, including wellness programs. 

Wellness programs depend on participation as well as the health of the individual. In the case of an individual's health, they must reach certain goals to claim the rewards. Vaccination surcharges fall into this category and are compliant.

The EEOC previously provided guidance related to vaccine incentives, saying that employers are legally allowed to offer incentives to employees for voluntarily providing proof of vaccination. 

Additionally, employers who are administering vaccines to their team members can offer incentives, but the incentives cannot be coercive. It's important to note that employers must keep information regarding employees and their vaccinations confidential.

The EEOC confirmed, "Requesting documentation or other confirmation showing that an employee received a COVID-19 vaccination in the community is not a disability-related inquiry covered by the ADA."

How Might Insurance Surcharges Affect Your Organization?

Vaccine mandates may dissuade individuals from becoming vaccinated due to feeling boxed into a decision they do not wish to make. This is where surcharges and wellness programs can make a difference for your organization. While employees may not be happy that they face higher fees for refusing the vaccine, they can still choose whether or not to get the vaccine. 

Surcharges provide employers with an opportunity to cover any excess costs that may be associated with unvaccinated employees. Surcharges can help curb this risk and offer your organization the freedom to step away from a mandate that may be causing undue concern amongst employees. When implementing these new measures, it is crucial to be transparent with your employees while still expressing the need to avoid the financial risk involved with unvaccinated employees. 

Employers should consider their situation and the risk currently involved in maintaining their unvaccinated employees. Formulate a strategy, be straightforward and honest with your employees, and offer a plan that will curb workplace health concerns as well as maintain financial stability.