US president Joe Biden’s Sept. 9 order directing companies with more than 100 workers to require Covid-19 vaccinations or weekly testing has caused concern among some business owners, who worry workers will quit as a result of the mandate.
But at least one company found a way to boost vaccination without losing employees. Delta Air Lines announced on Aug. 25 it would charge employees for their healthcare plans if they aren’t vaccinated against Covid-19 by November.
“The average hospital stay for Covid-19 has cost Delta $50,000 per person,” CEO Ed Bastian wrote in a memo. “This surcharge will be necessary to address the financial risk the decision to not vaccinate is creating for our company.”
Penalty appears to be working in Delta’s favor
The financial penalty appears to have boosted vaccinations among Delta Air Lines employees who were reluctant to get the jab.
In a media briefing on Sept. 9, the airline’s chief health officer, Henry Ting, announced that 20% of unvaccinated employees received their shots in the two weeks after Delta announced the surcharge, bringing the company’s overall vaccination rate to 78%. Additionally, Ting said that no employees resigned as a result of the new policy.
“We’ve seen no employee turnover, resignations—in fact, we’re seeing 5,000 new hires joining Delta Air Lines in the last two months,” he said, adding that the surcharge was effective in “shifting the group that was most reluctant” to get vaccinated.
Vaccine mandates for employers are tricky. Recent research by the firm Qualtrics showed that 44% of US workers would consider leaving their jobs if their workplaces made vaccination necessary, but the same survey found that 38% of workers would consider leaving if their employer did not institute a vaccine mandate. The early success of Delta’s policy suggests that employers may not see mass resignations as they adopt tighter vaccine protocols.
Will more employers look to surcharges rather than incentives?
Given the success of Delta’s approach, other companies may consider similar policies as they think about how to keep employees and customers safe.
A premium surcharge has been one of the less popular approaches taken by business owners to push their employees to get vaccinated thus far. A recent survey of US employers conducted by Willis Towers Watson found that while 17% of organizations offered financial incentives for workers to get vaccinated, just 2% imposed a surcharge on unvaccinated employees, or offered discounts for vaccinated ones. Cash payments from $100 to $199 were the most common financial incentive among organizations surveyed.
Jeffrey Smith, a partner at the workplace law firm Fisher Phillips, told Quartz he believes more companies are starting to consider surcharges now because most have a calendar-year health plan that kicks off in January. Smith said business leaders may be thinking about ways to reduce or eliminate potential group health plan expenses that could be avoided if more employees were vaccinated—an option that wasn’t on the table at the beginning of last year.
Employers looking to adopt a model similar to Delta may have to navigate complex legal questions surrounding such regulations. Smith noted that federal HIPAA rules bar US employers from discriminating against individuals based upon on a health factor—such as whether an employee can get a vaccine—but there is an exception for certain types of wellness programs.
Smith encouraged employers to consider options with “multiple facets” as they think about how to address both vaccination rates and health plan cost concerns.
“An employer should not use the health plan surcharge solely for the purpose of trying to increase workplace vaccination rates,” Smith said, adding that companies should consider both incentives—whether through health plans or cash payments—as well as education campaigns to convince their workers about the importance of vaccination.
