Health insurance may soon cost more for the unvaccinated

Posted at 3:43 PM, Aug 26, 2021

TAMPA, Fla. — The conversation surrounding COVID-19 and the workplace is getting more complicated as companies roll out vaccination mandates this week.

Delta Airlines received praise and criticism since it announced a decision to charge unvaccinated employees a monthly $200 surcharge on their insurance premium. Company officials said the extra money will pay for weekly coronavirus testing for employees who aren't vaccinated.

"When you hit people in their pocketbooks, that does tend to change their behavior," USF Health professor Jay Wolfson said.

Higher insurance premiums could have families across the nation adjusting their budgets. Wolfson said this type of move could be more feasible for companies to enact than vaccine mandates.

"[Companies are] going to say, 'You're costing us extra money and we can show it. Therefore you're going to pay the differential,'" Wolfson said.

Even with numbers supporting Delta's decision, Wolfson expects legal challenges to arise. But he said passing the cost onto employees isn't new. He likens this to companies charging smokers higher insurance premiums.


"A number of employers over the past decade have used the smoking policy as a basis for changing or encouraging, changing of behavior for employees," he said.

Wolfson said this kind of practice won't work for all private companies. He points to a specific industry where only 45% of its workers are vaccinated and companies associated with that industry would be negatively affected by mandates or monetary consequences.

"The nursing home industry is extremely reluctant to mandate it because the turnover rate in long-term care is very high. And they're concerned that if they mandate it, they're going to lose their workers," he said.

There's another factor that could drive up premiums. Many private insurers aren't waiving cost-sharing COVID-19 treatment anymore. Early on in the pandemic, insurance companies shouldered the cost of COVID-19 hospitalizations, but now that vaccines are readily available for Americans, that's changing.

Data from the Kaiser Family Foundation shows 72% of the two largest insurers in every state and D.C. aren't waiving these costs. By October, another 10% will phase out.

Wolfson said companies are beholden to their bottom line and that will determine just how many other businesses follow Delta's lead.

"Private businesses certainly have a compelling financial interest in doing something to protect both the health and welfare of their employees and the costs that they're incurring," he said.

We asked Wolfson if anyone could be exempt from being subjected to higher premiums. He told us if an employer’s plan is under the full provisions of the Affordable Care Act (ACA), then the only adjustments to the community-rated premium could be based on age categories of beneficiaries or smoking behavior.

Plans that are exempt under the Employee Retirement Income Security Act (ERISA) may include other factors since they are not fully governed by the community rating rule. Therefore, companies structured under the ACA requirements, may not, presently, be able to use anything other than smoking and age as a basis for premium differentials. Whereas exempt companies, not under the community rating restrictions of the ACA, and these are mostly larger companies, may be able to use vaccination status for premium differentials.

The new proposed policy by Delta is likely possible because the airline's plan is likely ERISA exempt, and not subject to the community premium rating requirements of the ACA.