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Premium Surcharges for the Unvaccinated Are Lawful Within Limits

Premium Surcharges for the Unvaccinated Are Lawful Within Limits

​In Oct. 4 guidance, the Biden administration surprised plan administrators by announcing it would limit vaccine incentive or surcharge programs for unvaccinated health plan participants.”The decision to treat a vaccine incentive or surcharge program as an activity-only program means that employers are now limited with respect to the level of surcharge [or incentive] that they can impose,” said Christine Keller, an attorney with Groom Law Group in Washington, D.C. Employers that wish to impose premium surcharges will “have to develop reasonable alternatives to vaccination, which may be administratively burdensome and unworkable in practice,” she said.’Activity-Only’ Rules AppliedWhile premium surcharges are lawful under the guidance, they must comply with nondiscrimination rules under the Health Insurance Portability and Accountability Act (HIPAA), Keller said.Regulations from the U.S. Department of Labor, the Department of Health and Human Services and the Department of the Treasury (the Tri-Agencies) in 2006 explained that the HIPAA nondiscrimination rules provide for two types of permissible wellness programs—participatory and health-contingent.”Health-contingent programs are divided as well into activity-only and health outcomes,” said Judith Wethall, an attorney with McDermott Will & Emery in Chicago.If a vaccine surcharge or incentive program had been designated a participatory program, no maximum dollar limits would have applied to the amount of a vaccine surcharge or incentive, Keller noted. But if a program is health-contingent, the total incentives across all nontobacco wellness programs—including the vaccine surcharge—cannot exceed 30 percent of the total cost of the medical plan coverage in which the employee is enrolled. There were good arguments that an incentive program is a participatory arrangement if participants simply need to show proof of vaccination to get an incentive or avoid a surcharge, Keller said. Classifying such an incentive program as participatory would have encouraged more employees to get vaccinated. But in the Oct. 4 guidance, the Tri-Agencies said that incentives for getting a COVID-19 vaccination must comply with the five criteria for activity-only wellness programs:The program must give those eligible for the program the opportunity to qualify for the reward under the program at least once per year.The reward for the activity-only wellness program, together with the reward for other health-contingent wellness programs with respect to the plan, must not exceed 30 percent of the total cost of employee-only coverage under the plan. If the incentive or surcharge applies to the spouse and/or dependent, the “cost of coverage” is the employer-plus-employee share of family coverage that the family receives, Keller noted.The program must be reasonably designed to promote health.The full reward under the activity-only wellness program must be available to all similarly situated people. There must be a reasonable alternative standard—or waiver of the otherwise applicable standard—for obtaining the reward for anyone for whom, during that period, it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard.The plan or issuer must disclose—in all plan materials that describe the terms of an activity-only wellness program—any available and reasonable alternative standard that would qualify for the reward and, if applicable, the possibility of …

Companies in India Tailor Benefits to a New World of Working

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Companies in India Tailor Benefits to a New World of Working

​As the COVID-19 pandemic continues to change the way we work, some employers in India have updated their employee benefits and allowances to make them more relevant to current times.A top priority has been medical benefits, given that the pandemic is far from over and medical treatment can be costly in India’s private hospitals. A ferocious wave of COVID-19 cases over the summer affected millions of employees and their families across the country, and employers are still responding. “The safety and well-being of employees has been predominant in whatever actions we take,” said Hema Mani, Chennai-based regional director of HR at Lennox India Technology Center, a manufacturer of heating, cooling and refrigeration systems. This year, Lennox added medical insurance coverage specifically for COVID-19 for its employees and their family members. It also created policies to support any other financial needs of employees that might not be covered by medical insurance, Mani said.  NEC Corporation India Pvt, a provider of IT and network technology solutions, increased employees’ medical coverage earlier this year when it renewed the company’s insurance policy. In addition, employees now receive a subsidized top-up option to further raise the coverage for their dependents. “We are hearing that COVID has long-term impact, so health has become critical for us,” said Kashish Kapoor, head of HR at NEC Corporation, based in Delhi. Companies like NEC and others have offered to reimburse the cost of vaccinations for employees and their dependents. This reimbursement would extend to any booster shots that may be required in the future, Kapoor said. Some companies have organized vaccination drives for staff. At chocolate-maker Hershey India Pvt, 90 percent of its employees have received at least one jab, and around 20 percent are now fully vaccinated. Hershey also extended health benefits to its third-party contractors who work on the company’s factory floor. And in addition to helping these workers get vaccinated, the company has made medical counseling available in multiple languages for contractors, according to Abhishikta Das, Mumbai-based HR director for Hershey.Last year, the company also announced a medical fund of up to $100 per employee to cover the cost of sanitizers, masks and anything else employees felt they needed to protect themselves from COVID-19, Das said. This was in addition to medical insurance for all employees, according to the company.To provide financial security for its sales staff, Hershey decided early on not to cut the incentives that make up a large part of their income. Instead, “we changed the design of our incentives,” Das said. Because sales executives could not visit clients in person, the company decided to assess the sales team based on the number of phone calls they were making to retailers and other clients. “That worked well,” Das noted. More Down TimeCompanies across India also have taken measures to help employees manage the anxieties and psychological stress tied to the pandemic and related issues. Some employers have implemented employee assistance programs for the first time.  At Hershey, the company contracted with two consultants …

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