Critter Corner: Can Health Insurance Companies or Life Insurance Companies Charge the Unvaccinated Higher Premiums?

Dear Angel,

I was listening to NPR recently. They mentioned that the current COVID-19 wave in the U.S. is mostly affecting unvaccinated Americans, who comprise more than 95% of current cases of hospitalization and death. I also heard that the average cost of a COVID-19 hospitalization in 2020 cost more than $42K per patient.  Will the unvaccinated be asked to bear more of the cost of treatment, in terms of insurance? How about a discount for those who are vaccinated?  I am still trying to convince my brother, Bob, to get vaccinated.

Thanks for your help!

Khan Vinsim

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Dear Khan,

According to economists, life insurance companies have the freedom to charge different premiums based on risk factors that predict mortality. Purchasing a life insurance policy often entails a health status check or medical exam, and asking for vaccination status is not banned.

• Fortune recently reported that while several of the biggest U.S. life insurance companies aren’t yet asking customers for their vaccination status, a few insurers told the magazine they are doing so for people at high risk. It wasn’t clear from the article whether this is affecting premiums.
• A recent study comparing life insurance policies from 2014 through February 2021 found that premiums and coverage didn’t change a lot during the pandemic. The study did find some evidence that policy terms for the oldest individuals and those with high-risk health conditions did worsen.
• The rapid development of vaccines may be why life insurance markets haven’t yet shown a dramatic response to COVID-19, but my guess is that in the near future, life insurance premiums will be higher for those who are not vaccinated against COVID-19.

It’s important to note that no matter what, coverage on existing life insurance plans won’t change, so a death due to COVID-19 will definitely be covered.

Health Insurers are a Different Story

Health insurers are a different story. The Affordable Care Act, passed in 2014, prevents insurers from pricing plans according to health – with one exception: smoking status.

When it comes to discounts for the vaccinated, there is a tool health insurers use to lower premiums for those who are vaccinated: wellness incentives. Just as insurers and companies offer discounts for weight loss or smoking cessation, they are also permitted to reduce the health insurance premiums that vaccinated employees pay.

Some employers are already incentivizing COVID-19 vaccinations with discounts on monthly premiums. So, even though insurers can’t charge the unvaccinated higher premiums, people who refuse to get a shot can end up paying more than their vaccinated colleagues.

The current COVID-19 uptick in the U.S. is primarily affecting unvaccinated Americans who, as you mentioned, represent more than 95% of current cases of hospitalization and death. According to the CDC, about 99.999% of fully vaccinated Americans have not had a deadly Covid-19 breakthrough case. This and keeping himself and others safe and healthy are among the many reasons to suggest to your brother that he should get vaccinated!

Hope this is helpful.

Angel