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Article | Insider

FAQs clarify COVID-19 vaccine coverage requirements, incentives

Benefits Administration and Outsourcing Solutions|Health and Benefits|Wellbeing
COVID 19 Coronavirus

By Anu Gogna and Benjamin Lupin | October 14, 2021

Plan sponsors may offer COVID-19 vaccine incentives or impose a surcharge on the unvaccinated as part of a HIPAA/ACA compliant wellness program.

The Departments of Labor, Health and Human Services, and the Treasury have released FAQ guidance clarifying various COVID-19 related issues, including how the Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination and Affordable Care Act (ACA) affordability rules apply to COVID-19 vaccination coverage and incentive requirements.1

COVID-19 vaccination coverage requirement

The FAQ guidance clarifies that group health plans must now cover a COVID-19 vaccine and its administration, without cost sharing, immediately once it becomes authorized under an emergency use authorization (EUA) or approved under a Biologics License Application (BLA). The coverage must follow the scope of the EUA or BLA, including any amendments, such as those that allow for additional doses to be administered to certain individuals, booster doses, or an expanding age demographic for whom the vaccine is authorized or approved.

COVID-19 vaccination premium incentive/surcharge

The FAQ guidance confirms that:

  • Employer plan sponsors may offer an incentive to employees to get vaccinated against COVID-19 or impose a surcharge on those who are unvaccinated as part of a HIPAA/ACA compliant wellness program. A premium incentive that requires an individual to perform or complete an activity related to a health factor, in this case obtaining a COVID-19 vaccination, to obtain a reward must comply with the five criteria for activity-only wellness programs, as set forth in the FAQ guidance. The same would be true for a surcharge.
  • Under applicable regulations, a group health plan may not require vaccination of participants, beneficiaries or enrollees as a condition for being eligible to receive benefits or coverage relating to the treatment of COVID-19.
  • To determine whether employer-sponsored health coverage is affordable for ACA employer mandate purposes, wellness incentives for being vaccinated against COVID-19 are treated as not earned and are therefore included in the employee’s required contribution.


1 See “Compliance Q&A: COVID-19 vaccine and testing mandates, incentives,“ Insider, September 2021, for more information.


Senior Regulatory Advisor, Health and Benefits

Senior Regulatory Advisor, Health and Benefits

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