FAQ: Can employers provide employees an incentive, such as a gift card or other cash payment, to receive the COVID-19 vaccine?
Many employers are considering doing this, but they will need to be mindful of the compliance obligations that would come with such a decision.
The biggest concern with an employer offering an incentive to employees who obtain the vaccine is that doing so is likely considered offering a group health plan. This would make the reward subject to many benefits-related laws. Specifically, when an employer offers an incentive to employees who receive medical care (in the form of a vaccine in this case), they are creating a wellness program that will need to comply with ERISA, COBRA, HIPAA, the ACA, etc.
If the incentive is provided only to employees on the major medical plan, then the employer is already meeting most of those compliance obligations through that plan and could simply tack on the vaccination reward as a part of the pre-existing plan. However, if it is also offered to employees who are not enrolled on the major medical plan, then the employer is creating a stand-alone wellness program and compliance becomes much more difficult (and virtually impossible for the program to meet the ACA’s requirements prohibiting annual and lifetime limits).
It is possible that the IRS and DOL will choose not to enforce the rules surrounding COVID-19 vaccination wellness programs in the interest of public health; however, the agencies have made no public announcement to that effect. If an employer wishes to offer an incentive to employees who aren’t on the medical plan they should consult with their own legal counsel about their options.
You can find more information on this and related topics in a recent seminar hosted by NFP.