Will Health Insurance Premiums Rise for Unvaccinated Individuals?

Experts are considering if insurance companies have the right to raise health insurance premiums for unvaccinated individuals. This is similar to how the Affordable Care Act (ACA) allows health insurance companies to charge smokers higher premiums than non-smokers. The hope is to incentivize people to get vaccinated against COVID-19, but it is unclear if this legislation will be passed. Employers are also looking to implement different types of strategies to encourage workers to get vaccinated. Insurance surcharges, which can amount to hundreds of dollars per year, are currently being considered. 

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Will Health Insurance Premiums Rise?

At this time, there is a very small chance there will be bipartisan support to allow health insurance companies to raise health insurance premiums for those who are unvaccinated. Additionally, there is insufficient evidence base to back an increase in health insurance premiums.

Dr. Matthew Neidell, Ph.D., an economics professor in the Department of Health Policy and Management at Columbia University, explains, “My sense is covid cases aren’t expensive enough to justify higher premiums. Health care costs from smoking are quite high, so insurers can make a valid case raising premiums for smokers is cost-effective. The overwhelming majority of covid cases are minor illnesses that don’t require any formal health care, so it would be hard to justify raising premiums.”

Raising Health Insurance Premiums to Incentivize COVID-19 Vaccination

Policymakers and employers alike are searching for ways to modify health insurance premiums to encourage COVID-19 vaccination. Dr. Neidell shares, “One could say they raise premiums to create an incentive to encourage people to vaccinate, but it’s probably not a high enough amount to move the needle, and it’s not clear insurers should be playing that role.”

While it may not be possible for health insurance companies to raise premiums, employers can increase the cost of premiums by up to 30%. Two main options are being considered by employers to increase vaccine uptake:

1. Increase premiums for those who are not vaccinated
2. Implement a health insurance surcharge for employees who are not vaccinated

Health Insurance Surcharges

It seems more likely that employers will enact their own policies to encourage vaccination.  From a health care cost perspective, unvaccinated individuals can cost their employers excessive amounts of money if they need to be hospitalized. Therefore, employers are considering charging an extra monthly fee to those who are not vaccinated. 

In 2020, the average cost of an individual employer-sponsored health insurance premium was $7,470 per year. Employees will likely be averse to any additional increase to already high premiums. Getting vaccinated can also save individuals money in the long run by reducing avoidable COVID-19 cases. According to a statement released in May, as long as providing proof of vaccination is voluntary, significant incentives to get vaccinated are allowed.