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COVID and the Workplace: Vaccine Mandates, Incentives and More

oswaldcompanies August 25, 2021
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If an organization is considering incentivizing vaccinations, mandating vaccinations or introducing financial penalties for unvaccinated employees, a number of general rules need to be considered before introducing a policy within the organization.

To assist in the interpretation of the rules, here’s some basic information you should know:

The HIPAA/ACA financial incentive law applies to group health plans only. If a wellness program is not a group health plan program, this incentive law does not apply. The financial incentive limit applies to health contingent wellness programs only. It does not apply to participatory programs. Limits to incentives are dependent on whether or not the incentive is tied to a group medical plan. When the incentive is not tied the group medical plan there is no incentive limit and no reasonable alternative is needed. When an incentive is part of a wellness program tied to the group medical plan, the following standard 2013 HIPAA/ACA wellness rules apply:

  • It must be voluntary.
  • The frequency of opportunity to qualify must be at least 1x per year.
  • The size of the reward would be in addition to any existing incentive amount. The maximum of the total incentive cannot exceed 30% of the employee only total premium (employer + employee) or 50% if tobacco/nicotine is part of the incentive.
  • The wellness program must be reasonably designed to promote health or prevent disease.
  • Uniform Availability and Reasonable Alternative Design must be available to all similarly situated individuals and for those who have disabilities protected by the ADA or sincerely held religious beliefs under Title VII of the Civil Rights Act of 1964.

Oswald recommendation is not to tie an incentive to the medical plan. Instead, employers could offer incentives to employees to voluntarily provide documentation that they received a COVID-19 vaccination on their own. The use of this approach allows employers to offer unlimited incentives and avoid compliance issues with the American Disabilities Act and the Genetic Information Nondiscrimination Act.

An employer offering the COVID-19 vaccine directly to the employee through a vaccine clinic has additional considerations. If the employer wants to incentivize the employee to get the vaccine by tying it to the medical plan, the EEOC cautions that incentives should not be “coercive.” The direct administration of vaccines by the employer or a vendor hired by the employer requires pre-vaccination questions. The EEOC considers these pre-vaccination questions as disability-related screening questions, which implicates the ADA. Any incentive tied to an employee answering disability-related questions must be part of a “voluntary” wellness program. An employer should avoid introducing any significant incentives for this type of approach.

The question is whether to incent or surcharge. In light of the differing opinions on the vaccine, an incentive is a safer option than a penalty or a surcharge to avoid potentially negative outcomes. If an employee’s choice regarding vaccination results in a penalty,  the penalty could be construed as coercive or punitive and create regulatory concerns for the employer.

Oswald recommendation for most employers is to not offer an incentive for the vaccination or a penalty for the unvaccinated employees. While the introduction of an incentive, penalty or a surcharge are within the regulatory guidelines, an employer must have a specific policy in place written and approved by a legal counsel specializing in employment law and the EEOC.

We understand employers may want to pursue the option of introducing a surcharge or penalty for unvaccinated employees. Oswald Companies is working in conjunction with in-house and external legal counsel to provide a recommended course of action for devising an enforceable policy. As has been stated by many, this is not only a question of the legal guidelines in place, but the decision is also influenced by the culture of a company and the ability to manage the interpretations and exceptions necessary to employ an effective workforce.

For more information as to what you should know about COVID-19 and the law, visit the following links:


Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.