Cost-sharing protections apply immediately upon vaccine-related approvals
Under the CARES Act, health insurance issuers and non-grandfathered group health plans must cover qualifying coronavirus preventive services without cost-sharing requirements. 1 The definition of “qualifying coronavirus preventative services” includes immunizations that have been recommended by the Advisory Committee on Immunization Practices (ACIP) and for which the Centers for Disease Control and Prevention (CDC) has adopted the recommendation. Such immunizations become entitled to cost-sharing protections 15 business days following the CDC’s adoption. 2
ACIP has issued several vaccine-related recommendations over the course of the pandemic, and a question arose regarding the effective dates of cost-sharing requirements applicable to the various vaccine approvals. In previous FAQs, the regulators indicated that the cost-sharing requirements become effective 15 business days after each vaccine-specific recommendation and adoption. 3 For example, the cost-sharing requirements regarding administration of the Pfizer vaccine to individuals aged 16+ would have become effective 15 business days after the December 11, 2020, Emergency Use Authorization (EUA).
However, in FAQs part 50, the regulators clarified that the applicable effective date for all vaccine-related cost-sharing requirements was ACIP’s December 12, 2020 recommendation (which the CDC adopted the same day) for vaccination with any COVID-19 vaccine within the scope of an EUA or Biologics License Application (BLA). 4 In effect, this means that payors must cover COVID-19 vaccines and their administration without cost sharing immediately once the particular vaccine becomes authorized under an EUA or approved under a BLA. This extends to any EUA or BLA amendment – including those regarding boosters, additional doses, and expansions to age demographics.
The vaccine authorization and approval landscape is rapidly changing, and payors must ensure that they can pivot quickly to integrate new requirements into their claim adjudication and appeal processes immediately upon EUA or BLA adoption or amendment. In addition to the heightened public scrutiny on insurance coverage of vaccines, failure to comply with the CARES Act creates ongoing regulatory and litigation risk. Given the conflicting guidance on this particular timing issue regulators will only enforce it prospectively. However members could potentially pursue causes of action related to past delays applying cost-sharing protections to vaccine administration. Payors should consider educating grievance and appeal personnel regarding this issue to reduce litigation exposure related to ongoing appeals.
Guidance on vaccine incentive programs
FAQs part 50 additionally addresses whether group health plans and issuers can provide incentives to encourage individuals to receive COVID-19 vaccines. Plans and issuers are generally prohibited from discriminating based on health factors in eligibility, premiums, or contributions. 5 However, there is an exception for group health plans to allow premium discounts, rebates, or modification of otherwise applicable cost-sharing requirements in return for adherence to wellness programs. 6
In the FAQs, the regulators advised that vaccine-based incentives can be offered so long as the premium discount complies with final wellness program regulations. Specifically, a wellness program that provides a premium discount to individuals who obtain a COVID-19 vaccination must (1) be reasonably designed to promote health or prevent disease, (2) provide a reasonable alternative standard to qualify for the discount, and (3) provide notice of the alternative. 7 In addition, the reward the plan provides in connection with the vaccine incentive program must not exceed 30 percent of the total cost of coverage, and individuals must be given the opportunity to become eligible for the program at least once per year. 8
However, the regulators state that group health plans may not condition eligibility for benefits or coverage on vaccination. For example, a health plan may not deny coverage for a COVID-19 treatment, such as remdesivir, for a hospitalized patient on the basis that the patient did not get the COVID-19 vaccine.
Employer-sponsored health plans should also be mindful of the impact of vaccine incentive programs on affordability of coverage, which pertains to the employer-shared responsibility payment. The FAQs clarify that wellness program incentives are treated as “not earned” for the purpose of assessing affordability of coverage. 9 For example, if a COVID-19 wellness program reduces individual premiums by 20 percent for the vaccinated, the reduction is not considered for purposes of determining whether the offer of that coverage is affordable. However, if the same wellness program increases premiums by 20 percent for unvaccinated individuals, the surcharge would be considered in the assessment of affordability. Any wellness program incentive should be scrutinized to determine the impact with respect to affordability rules.
For more information, see FAQs part 50.
Reed Smith will continue to track the progress of this and all COVID-19 guidance. Should you have any questions regarding anything related to COVID-19, please do not hesitate to reach out to the attorneys at Reed Smith.
- Pub. L. No. 116-136 (2020); 26 C.F.R. section 54.9815-2713T(a)(1)(v); 29 C.F.R. section 2590.715-2713(a)(1)(v); 45 C.F.R. section 147.130(a)(1)(v).
- Pub. L. No. 116-136 (2020); 26 C.F.R. section 54.9815-2713T(b)(3).
- See FAQs about Families First Coronavirus Response Act and CARES Act Implementation part 44 (Feb. 26, 2021)
- See CDC Recommended Adult Immunization Schedule (ages 19+) and CDC Child and Adolescent Immunization Schedule (ages 18 or younger), incorporating ACIP Dec. 12, 2020 recommendation, respectively, at CDC Adult Combined Schedule and CDC Child Combined Schedule
- Pub. L No.111-148, sec. 1001 (2010); 29 C.F.R. section 2590.702; 26 U.S.C. section 9802.
- 29 C.F.R. section 2590.702(b)(2); Nondiscrimination and Wellness Programs in Health Coverage in the Group Market, 71 Fed. Reg. 75014 (Feb. 12, 2007).
- Incentives for Nondiscriminatory Wellness Programs in Group Health Plans, 78 Fed. Reg. 33158 (Aug. 2, 2013).
- Id.
- 26 C.F.R. section 1.36B-2(c)(3)(v)(A)(4).
Client Alert 2021-267
