Understanding the relationship between the COVID-19 vaccine and your people, property and profits

Our communities, families, employees and organizations as a whole continue to be impacted by the COVID-19 pandemic. As COVID-19 vaccines roll out across the globe, there are complex decisions and policies regarding the vaccines to consider. This guide from Gallagher is designed to help you navigate questions you may have about organizational risk management, employee wellbeing and key property/casualty insurance coverages.

Organizational Risk and Management

What is an employee COVID-19 vaccine policy and what should it include?

An employee COVID-19 vaccine policy is documentation of your organization's guidelines with regard to the vaccines and your workforce. The document should include policies and procedures with respect to vaccination, and address issues directly related to vaccination (e.g., requirements, incentives, verification). Your employee vaccine policy should comply with applicable laws, as well as federal, state and local vaccine administration protocols. Consider developing a COVID-19 response committee to develop and implement your employee vaccine policy. Stakeholders should include representation from the HR team, legal counsel, senior leadership, middle management, front-line supervisors and employees. Senior leaders' commitment and involvement is critical. Leadership must ensure coordination with health insurance providers, community leaders and public health officials to stay current on vaccine data, costs and appropriate administration protocols.

How do we effectively implement a COVID-19 vaccination strategy?

After your organization develops a vaccination strategy, consider the following implementation tactics and questions.

  • Communication: How and when will the COVID-19 response committee communicate with employees about the employee vaccine policy, status updates and instructions? Who from senior leadership will lead the communication efforts?
  • Administration: Will you contract with an outside vendor to administer the vaccine? If administered on-site, where, how and who will administer the vaccine? If administered off-site, where and when should employees be vaccinated? What documentation do they need?
  • Verification: If the organization chooses to require vaccination before returning to the workplace, how will you track who has received the required doses and when? If employees receive the vaccine off-site, what documentation will verify they have complied with the required policy?
  • Recordkeeping: How can the organization use current human resources information systems (HRIS) to assist in appropriately tracking, collecting and storing sensitive employee data? How will you ensure your recordkeeping complies with Health Insurance Portability and Accountability Act (HIPAA)?

What should/can we do if an employee refuses the COVID-19 vaccine?

Proceed with caution. Employees who refuse the vaccine due to a disability or religious beliefs are protected under the Americans with Disabilities Act (ADA) and Title VII. Whether or not these laws apply to the situation, consult your employment attorney before taking action.

What should we do if someone gets COVID-19 at our workplace after the vaccine has been deployed?

Organizations should continue to follow the guidelines put in place by organizations like the Centers for Disease Control and the World Health Organization, as well as local health guidelines. This includes guidance on reporting COVID-19 cases in the workplace and implementation of contact tracing.

When should we stop mandating testing, masks, contact tracing and other measures?

Organizations should continue to follow the guidelines put in place by organizations like the Centers for Disease Control and the World Health Organization, as well as local health guidelines. This includes guidance on practice and duration concerning continued cleaning, personal hygiene, social distancing, personal protective equipment (PPE) and reporting COVID-19 cases in the workplace.

Will our organization be required to pay for the cost of the COVID-19 vaccine?

As of December 2020, the federal government plans to purchase and distribute all COVID-19 vaccinations through state and local health departments. Thus, it is likely that employer-sponsored group health plans will be responsible only for payment of fees relating to administering the vaccine, rather than the full cost of the vaccine.

Will carriers cease exclusions on communicable disease and COVID-19 when the vaccine has been deployed?

It's unlikely that the COVID-19 vaccine will trigger an end to communicable disease or COVID-19 exclusions.

Employee Benefits

Has the Equal Employment Opportunity Commission (EEOC) published guidance on whether we can require all of our employees to be vaccinated against COVID-19 before returning to work?

The EEOC has indicated that employers may be able to require that employees get inoculated if certain conditions are met. As a threshold matter, whether an employer can implement a mandatory vaccine policy will likely depend in large part on the type of business the employer operates. Although vaccinations are not considered to be medical examinations under the ADA, prescreening vaccination questions may implicate the ADA's provision on disability-related inquiries, which are inquiries likely to elicit information about a disability. If an employer administers the vaccine, it must show that any prescreening questions it asks employees are job related and consistent with business necessity. More specifically, according to recent EEOC guidance, "[t]his means that such questions, if asked by the employer or a contractor on the employer's behalf, are disability-related under the ADA. Thus, if the employer requires an employee to receive the vaccination, administered by the employer, the employer must show that these disability-related screening inquiries are job-related and consistent with business necessity. To meet this standard, an employer would need to have a reasonable belief, based on objective evidence, that an employee who does not answer the questions and, therefore, does not receive a vaccination, will pose a direct threat to the health or safety of her or himself or others." Thus, a hospital may be able to clearly show that a mandatory vaccination program is job related and consistent with business or necessary to avert a direct threat, but a law firm may have more difficulty meeting those requirements.

After meeting the threshold requirement under the ADA, employers must also be aware of the potential need to provide a reasonable accommodation for employees with certain medical conditions or with objections based on religious beliefs. In December 2020, the EEOC updated its COVID-19-related FAQs to address reasonable accommodations.

Are group health plans required to cover COVID-19 vaccinations?

Yes. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, group health plans must cover COVID-19-related preventive services without cost-sharing. This means that plans must cover a COVID-19 vaccination and its administration without cost-sharing, regardless of how the administration is billed and regardless of whether an individual must receive one or more doses of the vaccine. This includes coverage of the administration of the immunization in instances where a third party, such as the federal government, pays for the vaccine. For example, if there is no cost to the provider because the vaccine is provided for free by the federal government to the provider, a group health plan would not be required to reimburse the provider for the cost of the vaccine itself. However, the plan would pay for the office visit related to administration of the vaccine.

When must group health plans begin to cover COVID-19 vaccinations?

In general, the preventive service rules require that plans provide coverage of recommended preventive services for plan years that begin on or after the date that is one year after the date the recommendation or guideline is issued. The CARES Act, however, provides for an accelerated timeline for coverage of qualifying COVID-19 preventive services, requiring coverage within 15 business days after the vaccine has been recommended by the Advisory Committee on Immunization Practices (ACIP) and adopted by the CDC. Note, although the Interim Final Rules (IFRs) include a provision with respect to the 15-day accelerated timing requirement, that requirement will not apply after the expiration of the COVID-19 public health emergency. Thus, additional guidance would be welcomed.

Is a group health plan required to cover COVID-19 vaccinations that are provided out-of-network?

Yes. Plans must cover, without cost-sharing, a COVID-19 vaccine regardless of whether the service is delivered by an in-network or out-of-network provider. Note, although that the IFRs include a provision with respect to the coverage of out-of-network vaccines without cost-sharing, that requirement will not apply after the expiration of the COVID-19 public health emergency. Thus, additional guidance would be welcomed.

If a COVID-19 vaccine is administered by an out-of-network provider, how does our health plan decide in what amount to reimburse the provider?

For an out-of-network provider, a plan or issuer must reimburse the provider for the qualifying COVID-19 preventive service (e.g., administration of a vaccine) "in an amount that is reasonable, as determined in comparison to the prevailing market rates for such service." The Departments of Labor, Health and Human Services, and Treasury indicated in IFRs that they will consider the amount that would be paid under Medicare for the item or service as reasonable.

Which of our group health plans are required to comply with the COVID-19 vaccination coverage requirements?

The requirement to cover COVID-19 vaccinations without cost-sharing applies to non-grandfathered plans (individual and group) and grandmothered plans. The requirement does not apply to grandfathered health plans, except benefits, or short-term, limited duration insurance. So, a non-grandfathered (as that term is used under the ACA) employer-sponsored medical plan would be required to cover the vaccine without cost-sharing, but an excepted benefit dental plan would not.


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