Incentivizing Employees to get the COVID19 Vaccine: Common Legal Questions

Now that the COVID19 vaccine is rolling out, many employers are wondering whether and how they might incentivize employees to receive the vaccine. As noted in a previous blog post, the Equal Employment Opportunity Commission (EEOC) has issued guidance on mandating the COVID19 vaccine. One would think that if the EEOC has laid a pathway for mandating the vaccine, then merely incentivizing the vaccine should be permissible by default. But employers are wary of making that assumption, and in early February, forty-two of them wrote the EEOC asking for clarification on whether incentivizing the vaccine is permissible.

This desire for clarification was made even more urgent by the EEOC’s subsequent withdrawal of its proposed wellness incentive rules issued in January. As noted in another blog post, the EEOC had proposed wellness incentive rules under the Americans with Disabilities Act (ADA) that would have allowed “de minimis” incentives for wellness programs that collect employee health information. Those same proposed rules would have allowed incentives up to 30% of the total cost of coverage for group health plan wellness programs that were also “health contingent,” as defined by the Health Insurance Portability and Accountability Act (HIPAA) wellness incentive rules.

Now with the proposed rules off the table, with no hint of any replacement rules at this time, employers are once again left with the ambiguous statutory guidance that incentives tied to employee health information collection must be part of a “voluntary” wellness program.  42 USC § 12112(d)(4)(B). So the request by employers for additional EEOC guidance is understandable.

Until the EEOC provides clarification, employers must wrestle with several different laws that impact incentivizing COVID19 vaccines. This blog post offers insight into the most common questions and most prominent legal issues that employers may face as they decide whether and how to offer COVID19 vaccines to their employees.

Can Employers Incentivize the COVID19 Vaccine?

Probably. Offering an incentive to employees to get the vaccine triggers the HIPAA wellness incentive rules because it is likely that some employees may not be able to get the vaccine due to an underlying health issue. When an employee’s health status comes into play in order to earn a reward, the wellness program becomes “health contingent” under the HIPAA/Affordable Care Act (ACA) wellness incentive rules. See 78 Fed. Reg. at 33161 (June 3, 2013).   HIPAA/ACA rules also apply because offering the COVID19 vaccine likely qualifies as “medical care,” making the employer’s offering a “group health plan” subject to the HIPAA/ACA rules. Unlike wellness activities where there is not an imminent probability of developing a disease, the “pandemic” status of COVID19 arguably places COVID19 vaccines squarely within the definition of “medical care” according to the IRS guidance. If an employer sponsors “medical care,” then that sponsorship creates a group health plan, even if it is separate from its major medical plan offerings.

Because HIPAA/ACA rules apply, and because offering an incentive likely triggers the “health contingent” requirements under those rules, employers must meet the “five factor test” when incentivizing the COVID19 vaccine.  Those five factors are:

  1. Frequency of Opportunity to Qualify. The program must give individuals eligible for the program the opportunity to qualify for the reward at least once per year.
  2. Size of Reward. The total reward for all wellness activities and/or goals must not exceed thirty percent (or fifty percent for tobacco cessation programs) of the total cost of employee-only coverage under the plan (or, if an employee’s family can participate in the wellness program, the reward must not exceed thirty percent (or fifty percent if tobacco cessation programs are included) of the total cost of coverage in which an employee and any dependents are enrolled. The cost of coverage includes the total amount of employer and employee contributions towards the benefit package under which the employee is (or the employee and any dependents are) receiving coverage.
  3. Reasonable Design. The wellness program must be reasonably designed to promote health or prevent disease. That is, it must have a reasonable chance of improving the health of, or preventing disease in, participating individuals, and it should not be overly burdensome or a subterfuge for discriminating based on a health factor. Given the preliminary scientific results from the COVID19 vaccines and the emergency authorization by the FDA, it would seem that offering the COVID19 vaccine would meet this requirement quite easily.
  4. Uniform Availability and Reasonable Alternative Design. The full reward under the program must be available to all similarly situated individuals. To achieve this, health contingent wellness programs must allow a reasonable alternative standard (or waiver of the initial standard) for obtaining the reward for any individual for whom, for that period, it is unreasonably difficult due to a medical condition or medically inadvisable to satisfy the initial standard.  For activity-only programs, which a COVID19 vaccine program would likely be, plans may seek verification from an individual’s personal physician that a health factor makes it unreasonably difficult for him or her to satisfy, or medically inadvisable for him or her to attempt to satisfy, the initial standard.

Plans may impose standard cost sharing under the plan for medical items and services furnished pursuant to the physician’s recommendations.

  1. Notice of Other Means to Qualifying for the Reward. The plan must disclose in all plan materials describing the terms of a wellness program the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the initial standard) including contact information for obtaining a reasonable alternative standard and a statement that recommendations of an individual’s personal physician will be accommodated. If plan materials merely mention that a wellness program is available, without describing its terms, this disclosure is not required.

As long as the employer meets these five factors, the employer’s incentive would comply with HIPAA/ACA rules.

Can Employers Incentivize Only Employees Eligible for the Vaccine under Current Local Public Health Guidelines?

This is an interesting question. Currently, in most parts of the United States, only certain groups of individuals are eligible to receive the vaccine. For example, where I live, first responders and individuals age 65 and over are eligible. Educators and other essential workers are also eligible, and soon those 16 and over with certain underlying health conditions will be eligible to receive their vaccine. When public health guidelines categorize eligibility by age or health status, employers may need to follow suit. If an employer wishes to incentivize only those groups currently eligible to receive the vaccine to encourage those groups to receive it, one could argue that limiting the reward to those groups is permissible under the HIPAA/ACA “benign discrimination rule. Under that rule, “nothing prevents a plan or issuer from establishing more favorable rules for eligibility or premium rates (including rewards for adherence to certain wellness programs) for individuals with an adverse health factor than for individuals without the adverse health factor.”  78 Fed. Reg. at 33163 (June 3, 2013).

What if Vaccine Supply Runs Out Before All Employees Earn their Incentive?

If an employer offers an incentive to employees to receive the COVID19 vaccine and it is deemed an activity-based wellness program, as discussed above, the employer must adhere to the five factor test. One of the five factors requires the employer plan to give individuals eligible for the program the opportunity to qualify for the reward at least once per year. If an employee is eligible to earn the reward (i.e., they are in a vaccine-eligible category) but supply runs out before they can get their vaccine, the question becomes whether the employer must offer a reasonable alternative to the employee to earn the incentive. According to the HIPAA/ACA rules, reasonable alternatives must be offered when an employee is unable to earn the reward through the “initial standard” (in this case, getting the vaccine) because of a medical condition. That is not the case if the reward is unavailable because of lack of supply. So, the employer may have an argument to suspend the incentive program and not offer reasonable alternatives once supply is exhausted. Of course, employers should confirm with their legal counsel before making such a decision, as taking away incentives may trigger complaints from employees.

Should Employers Be Concerned if Employees Suffer an Adverse Reaction to an Incentivized Vaccine?

According to the federal Health Resources and Services Administration (HRSA), the COVID19 vaccine is covered under the Countermeasure Injury Compensation Program (CICP). This means that if someone who receives the COVID19 vaccine is seriously injured or dies, they have one year to apply for compensation for medical expenses, lost income, or benefits to the deceased person’s survivors or estate. The CICP program, however, does not replace possible worker’s compensation benefits.  Rather, CICP is a payer of “last resort” and “can only reimburse or pay for medical services or items or lost employment income that are not covered by other third-party payers, such as Worker’s Compensation.” See

An employer that incentivizes a COVID19 vaccine runs the risk that any injuries that occur as a result of the vaccine may be deemed eligible for worker’s compensation. Worker’s compensation eligibility varies from state to state. Key factors in determining whether a COVID19 vaccine injury is eligible for worker’s compensation may include if the injury arose out of the course of employment and was causally related to the employment. See e.g., Stanner v. Compensation Appeal Board (Westinghouse Electric Co.) 604 A.2d 1167 (Pa. Commw. LEXIS 164, 1992).The bigger role an employer plays in encouraging employees to get their vaccine, the higher the risk the employer may face if an adverse reaction occurs. Employers may want to explore their state’s worker’s compensation law before deciding whether to incentivize the COVID19 vaccine.

What about ADA Wellness Incentive Rules?

The EEOC has already opined that merely offering COVID19 vaccines to employees would not trigger ADA compliance requirements unless the employer (or vendor hired to administer the vaccine) started asking disability-related questions. Because such questions are very likely to occur, the ADA would be implicated. What does that mean?  It means any incentives you offer with regard to COVID19 vaccine programs would need to comply with the ADA “voluntary” requirement. Incentives that are “too high” (i.e., make employees feel like they “must” get the vaccine) would violate the ADA. Without any further guidance from the EEOC as to what constitutes a “voluntary” wellness program, employers are left to guess what incentive amounts employees will view as “voluntary.” It’s a subjective question, so one good way to assess employee attitudes about incentives is for the employer to survey them.

An alternative for employers to consider is to incentivize employees to obtain the vaccine from a third party (such as a healthcare provider) and then bring proof to the employer that the employee indeed received the vaccine. The EEOC has stated that asking to see such proof (assuming the proof is limited only to information relating to receiving the vaccine and nothing more) would not implicate the ADA.  See (Q/A K.3).


This blog has just scratched the surface on the numerous legal questions that surround an employer’s decision to incentivize the COVID19 vaccine. The post does not even touch on potential civil rights issues, Fair Labor Standards Act issues, data privacy issues, to name just a few. As a result, before deciding whether to incentivize (or mandate) the COVID19 vaccine for employees, employers would be wise to consult with their legal counsel to develop a plan and minimize legal risk. Contact the Center for Health and Wellness Law, LLC if you are in need of such legal guidance.