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Will health insurance be more expensive for the unvaccinated?

Health Insurance Marketplace • August 18, 2021 at 8:19 AM • Written by: Gabrielle Smith

As the world continues to feel the effects of the global pandemic, health insurance professionals are speculating whether changes in health insurance costs could be coming soon for unvaccinated Americans.

With the large majority of COVID-19 deaths and hospitalizations in the U.S. among the unvaccinated, some suggest that the increased risk for unvaccinated employees could cause a spike in group health insurance premiums, or even cause an increase in individual health insurance premiums for the unvaccinated.

In this article, we break down a few of the possibilities for how employees’ vaccination status may change health insurance costs, and what employers can do to make sure their health benefits are as affordable as possible for their employees regardless of their vaccination status.

How might my vaccination status influence insurance costs?

Right now, there are two main theories on who could end up paying more for health insurance based on vaccination status:

  • Individuals: Health insurance companies could charge a higher premium for unvaccinated individuals.
  • Employers: Health insurance companies could raise employers’ group health insurance premiums who have a lot of unvaccinated employees.

Let’s look into each theory a bit closer.


First, let’s talk about how vaccination status could influence individual health insurance costs. Under current law, the Affordable Care Act prevents anyone from being charged more for health insurance based on their health status, such as a preexisting condition.

However, tobacco use is considered a relevant factor that health insurance companies can legally ask about. In turn, they can charge smokers more for their insurance than nonsmokers because of their increased health risk.

Some suggest that if insurance companies can ask about tobacco use, they’ll have a right to ask about vaccination status and put unvaccinated people in a separate risk pool, charging them a higher premium.


Next, let’s look at how vaccination status could influence employer-sponsored group health insurance premiums. Generally speaking, group health insurance premiums rise each year around renewal season for a lot of reasons. One of them has to do with the overall cost for insurance companies to insure all of the employees in an organization.

For example, if employees are collectively submitting a lot of claims, the cost of insuring the group overall goes up, causing next year’s premiums to rise once it’s time to renew the plan. In the case of an organization that has a lot of unvaccinated employees, they may be more likely to incur more medical expenses, especially for hospitalizations for COVID-19 cases.

NBC reported thoughts from Brandeis University's Michael Doonan, the executive director of the Massachusetts Health Policy Forum, who explains it this way:

“Companies who are negotiating with insurance companies, if they have a whole bunch of employees who are unvaccinated and their costs go up this year, next year their premiums are going to go through the roof."

Are there other ways to offer affordable coverage?

Whether or not your employees are vaccinated, it’s important to ensure that your health benefits stay affordable for both you and your employees. Health reimbursement arrangements (HRAs) are a great way to make that happen.

With an HRA, employers are able to set their own monthly allowance of pre-tax dollars for employees to use on the individual insurance premiums and qualifying medical expenses they incur. This keeps employers away from the rising group health insurance premiums, and helps protect your employees against any potential increases in their individual health insurance premiums.

PeopleKeep offers three types of HRAs for employers of all sizes:

  • Qualified small employer HRA (QSEHRA)
    • A small business HRA designed for organizations with fewer than 50 full-time employees
  • Individual coverage HRA (ICHRA)
    • An HRA for organizations of all sizes that can work as a stand-alone benefit or as an option for employees who don’t qualify for the group health plan
  • Group coverage HRA (GCHRA)
    • A supplemental HRA to go alongside a group health plan to help cover the costs that aren’t fully paid for by the group plan

Take our quiz to see which HRA is best for your organization


While there’s currently no clear picture of whether or not vaccination status will change how much health insurance costs for individuals and employers, the best thing employers can do to prepare is adopt a simple, tax-free alternative to expensive group health insurance plans—an HRA. No matter whether or not your employees have their shot, you can empower your employees to make their own healthcare decisions, while you get a cost-controlled health benefit that fits within your budget.

Interested in an HRA for your organization? Schedule a call with one of our benefits advisors today!

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