Employers consider health premium surcharges for workers who refuse to get COVID-19 vaccines

Employers are mulling new ways to encourage vaccination against COVID-19, and one option that's gaining steam is premium surcharges, according to experts at Mercer.

Wade Symons, a partner at the benefits consulting firm, wrote in a blog post that surcharges offer an alternative to mandates, which many employers find unattractive. The thinking is similar to charges associated with tobacco use: Refusing to get vaccinated and contracting COVID can lead to higher health costs for the employer.

Symons told Fierce Healthcare that employers tried the carrot approach, with many offering perks and incentives to encourage vaccines. Now, they’re looking to try the stick.

"I think it's because it still feels like a choice in the employer's mind," he said.

Recent survey data from Mercer found that few employers are using the carrot approach, with 10% offering a financial award and 16% providing additional time off.

RELATED: More than 50 medical groups push healthcare employers to require COVID-19 vaccination

However, while employers have been hesitant to institute mandates, the winds may be changing with the spread of the delta variant, Symons said. In June, a survey from Willis Towers Watson found that 70% of employers would not mandate vaccines.

Since then, though, major employers such as Walmart and Disney have started to mandate vaccines for certain workers, as The New York Times reported.

"If the delta variant and some of these other variants continue to be a bigger story and a problem, that certainly would lead employers down that road," Symons said.

Trends like this tend to begin with "jumbo" employers like Walmart and then filter down through the market, Symons said.

Mercer's survey also suggests employers are becoming increasingly receptive to mandates, with more than 1 in 10 saying they require, or are planning to require, a vaccine for their workforces to return to work sites.

RELATED: Pandemic accelerating employers' interest in voluntary benefits: WTW survey

As employers navigate ways to address vaccine rates, they must manage a number of legal considerations, Symons said. Compliance problems have been a major hurdle to finding ways to incentivize vaccines, he said.

Policies must comply with regulations protecting people with disabilities and preventing discrimination against people with preexisting medical conditions, he said.

In addition, there are limits to how much employers can charge if they want to pursue the surcharge route.

Symons also said the conversation around encouraging vaccinations continues to evolve.

"I'm curious as to where it might go from here," he said.