Unvaccinated workers could end up paying $50 more for health insurance — per paycheck

Workers who have yet to be vaccinated against COVID-19 could soon be paying as much as $50 more per paycheck for health insurance as companies across the U.S. try to protect their employees — and themselves — from outbreaks of the disease.

Although most companies remain hesitant to require workers to get vaccinated before they return to the office, even offering hefty financial incentives to get a shot, a growing number of big employers are imposing such mandates. And as sick Americans again flood hospitals amid a surge in cases caused by the virus's Delta variant, experts say corporations are weighing whether to hike unvaccinated employees' monthly insurance premiums.

"Because of the emergence of the Delta variant and because vaccination levels have stalled out with employers, they're trying to take some more 'stick'-type measures rather than the incentive," said Wade Symons, a partner at Mercer Health, a benefits consulting firm. "They're looking for something that's going to move the needle, and they're looking at a surcharge as a potential option for that." 

Symons said the idea of charging unvaccinated employees more for health coverage is "gaining momentum" among his  clients in manufacturing, retail, hospitality, financial services and other sectors. The rationale is simple: Workers who have yet to get jabbed are at greater risk of getting COVID-19. A severe case could be costly for their employer, particularly if it involves an extended hospital stay. 

"Unvaccinated individuals have potential to cost the employer more from a health care spend perspective," Symons told CBS MoneyWatch. "They could get COVID and incur expensive hospital costs up to $50,000 for an individual with a tough COVID case." 

As a result, Symons expects unvaccinated workers at some employers to see their health premiums jump between $20 and $50 per paycheck. 

"It allows a company to say, 'OK, you have a choice to do it or not, but if you don't there will be a surcharge you have to pay.' So it feels a little better from the employer's perspective to be able to say, 'We're not mandating it, but we want to nudge you along the road to getting vaccinated,'" he said.

Like penalizing smokers

There's precedent for raising insurance premiums on individuals who are deemed a greater health risk. Take smokers, who are more likely to die of cancer and tend to face higher health costs than nonsmokers.

"The point is that personal choices have financial consequences," said Sheldon H. Jacobson, a professor of computer science who focuses on risk at the University of Illinois at Urbana-Champaign. "In COVID-19, the decision to not take a vaccine is not just a personal decision."

Meanwhile, a person's private health care decision can have very public costs.

"There is a baseline of costs associated with pooled insurance. If you're vaccinated, you'll be safer. That safety should translate into some kind of value, which is that you're at a lower risk of having health issues associated with COVID-19, so why not be rewarded for that," Jacobson said.

For now, it makes sense for the unvaccinated population to shoulder some of the cost of their decisions, another expert said.

"In terms of the economics of infectious disease and vaccination in particular, we know that unvaccinated individuals are exposing an externality on others," said Laura Boudreau, a professor of economics at Columbia Business School. "They are imposing a cost on the people who they are around and they should share in that cost." 

More employers are expected to make vaccine mandatory once the shots, currently administered under an Emergency Use Authorization (EUA), receive full approval from the Food and Drug Administration. 

"I'll be interested in seeing how long these middle-of-the-road policies survive, especially as many people expect announcement of formal regulatory approval for Pfizer next month," Boudreau said. "That opens the door for many employers, who have been hesitating because of the EUA, to consider more stringent policies for employees."