Can Employers Raise Health Insurance Premiums for Unvaccinated Workers?

Can Employers Raise Health Insurance Premiums for Unvaccinated Workers?

As companies try to mitigate the risk of COVID-19 outbreaks in the workplace that could be prevented by vaccination, some are considering raising premiums on health insurance for their employees. Soon, unvaccinated workers could pay an extra $50 per paycheck. This has left many employees wondering, “Can my employer do that? Is it legal?”

Elsewhere, we have noted that employers are legally permitted to mandate mask-wearing to protect the safety of workers and patrons in the workplace. Likewise, employers are able to require that employees be vaccinated. There are limited caveats to these general rules of thumb. For example, workers can request medical or religious exemptions to a vaccine mandate. In general, however, if workers refuse to follow either of these workplace requirements, they could risk termination.

Some companies have decided not to require vaccination of all of its employees, but rather to use a variety of “carrots and sticks” to incentivize inoculation. At times, businesses have invited medical providers on site to offer vaccines, making it convenient for employees. Certain employers have even offered to pay their employees to get vaccinated, either in the form of direct cash payments or paid time off.

If such positive incentives fail to achieve the desired level of immunization, companies may resort to a “stick.” Companies know that the greater the exposure its workers have to health risks, the greater the cost of the employer’s health insurance coverage. Since unvaccinated workers are more likely to fall ill and require an extended hospital stay—sometimes to the tune of over $50,000 per employee—some companies have decided that raising health insurance premiums is their best remaining option.

So to answer the employee’s question, yes, employers may legally require workers who choose to remain unvaccinated to shoulder some of the increased costs of their health insurance coverage. This is similar to how insurers may increase premiums for smokers by 50%. It is foreseeable that premiums for unvaccinated workers could also increase as much as 50%, or possibly more as COVID-19 variants continue to evolve into more transmittable, and deadly, diseases.

Whatever course of action an employer takes, employees will have to decide for themselves if the carrots and sticks urging them toward vaccination are sufficient enough for them to get the vaccine and stay with their employer. Workers who seek new employment should keep in mind that while some employers hesitated to mandate vaccines administered under the FDA’s Emergency Use Authorization, that may change now that the FDA approved the Pfizer-BioNTech vaccine (Comirnaty) on August 23, 2021.

For past coverage on the use of financial incentives to promote vaccination, see here.

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