May Our Self-Insured Health Plan Limit Eligibility to Employees Vaccinated Against COVID-19?

QUESTION: Several of our employees were hospitalized over the past year with COVID-19 and incurred large medical expenses, which our self-insured health plan was obligated to cover. We later discovered that these employees were not vaccinated against COVID-19. Given the financial impact of COVID-19 on our health plan, can we require employees going forward to show proof of COVID-19 vaccination as a condition of eligibility?

ANSWER: The DOL, IRS, and HHS have made clear that group health plans subject to HIPAA’s health status nondiscrimination rules cannot establish eligibility rules based on whether an individual obtains (or has obtained) a COVID-19 vaccination. The HIPAA rules generally prohibit group health plans from discriminating against participants, beneficiaries, and enrollees in eligibility, premiums, or contributions based on a health factor, and implementing regulations state that rules for eligibility include, among other things, rules related to covered benefits and benefit restrictions. Thus, benefits under the plan must be uniformly available to all similarly situated individuals. Any restriction on benefits must apply uniformly to all similarly situated individuals and must not be directed at individuals based on a health factor.

The following groups may be treated as distinct groups of “similarly situated” individuals for purposes of the HIPAA nondiscrimination rules: (1) groups of participants based on a bona fide employment-based classification, such as length of service or full-time vs. part-time status; (2) participants as a separate group from beneficiaries (e.g., employees as compared to spouses); and (3) groups of beneficiaries based on a participant’s employment classification (e.g., spouses of full-time employees vs. spouses of part-time employees) or their relationship to the participant (e.g., an employee’s spouse vs. dependent children). Whether a group of individuals is “similarly situated” cannot hinge on health status, including whether they have been vaccinated.

The agencies note that an exception to the HIPAA rules allows a group health plan to adopt a wellness program that, within certain parameters, provides premium discounts or rebates, or modifies otherwise applicable cost-sharing mechanisms, based on a health factor. However, this exception does not allow a plan to deny eligibility for benefits or coverage and would not justify excluding employees from eligibility based on their COVID-19 vaccination status. For more information, see EBIA’s HIPAA Portability, Privacy & Security manual at Sections XI.C (“Nondiscrimination Rules for Eligibility and Benefits”) and XI.I (“Wellness Programs Must Meet Specific Nondiscrimination Requirements”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D (“Benefits Must Not Be Discriminatory”).

Contributing Editors: EBIA Staff.

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