Organizational Wellness

Wellness Program Regulations HR Departments Need to Know

Mar 22, 2023
Last Updated May 9, 2024

A lot goes into running a successful wellness program: You have to decide what aspects of wellness you want to support, define success, pick a program, administer its activities, keep participants engaged, answer employee questions, and track its impact. And then there’s making sure all of those activities are compliant with wellness program regulations.

That’s right – there are federal laws and regulations dictating what you can include in a wellness program and how it can be run. But don’t get overwhelmed! Ensuring your program complies with federal regulations doesn’t have to add any anxiety to your efforts to support employee wellness. We’ve pulled together this guide to these rules so you can easily assess whether your plan is ready to launch, or if you need some tweaks before rolling it out.  

Without further ado, let’s  look into what should be included in a wellness program, how to tell if your initiative is considered a health-contingent program, and the regulations that shape them all.


What Should Be Included in a Wellness Program? 

Wellness programs provide employees with resources and support to help improve their overall health and wellbeing. They can include a myriad of benefits, including but not limited to: nutrition coaching, fitness classes, smoking cessation programs, opportunities to earn additional PTO and subscriptions to meditation apps. A well-structured wellness program will typically include a wide variety of tools and resources because every employee is on a different wellness journey, so they will benefit from different supports.

At times, what you include in a wellness program will be shaped by wellness program regulations. IRS regulations, for example, will impact the program completion rewards an HR department offers, as cash rewards have tax implications for employees. Or, consider that a wellness program might need to offer multiple ways to participate to ensure it meets the requirements outlined by the Affordable Healthcare Act. 

For a deeper dive into how such regulations shape what a program includes, see the section titled “Wellness Program Regulations U.S. HR Departments Need to Follow” below.


What Are Health-contingent Wellness Programs?

Health-contingent wellness programs offer participants incentives to reach specific health standards, often in the form of a cash rebate on their cost of coverage. 

For a wellness program to be considered health-contingent, it must:

  • Require participants meet a specific health standard. These standards are usually biometric screening values like cholesterol levels, or health choices like no tobacco use. 
  • Meet a “reasonable alternative standard,” or a way for an employee to access their full employee benefits regardless of their health status or health factors.

Examples of a reasonable alternative standards include: 

  • A doctor has a patient with an existing medical condition like high blood pressure. The patient needs to walk 10,000 steps per day to get a reward. The doctor may suggest walking only 7,000 steps as an alternative.
  • A person may be required to quit smoking to obtain a reward, but that may be too big of a lifestyle change for them. They could request a “reasonable alternative” of completing a smoking cessation program.

There are two types of health-contingent wellness programs: activity-only and outcome-based.

Activity-only Wellness Programs

Activity-only programs require participants to participate in wellness activities — like health screenings or fitness programs — to receive an incentive. An employer could, for example, offer an incentive of $50 to every employee who completes a wellness questionnaire.

Outcome-based Wellness Programs

Outcome-based programs require participants to meet specific health outcomes — such as reducing cholesterol or quitting smoking — to receive an incentive. In this structure, an employer could offer an incentive of $100 to every employee who hits a specific goal, like walking 10,000 steps a day for a month straight.


Wellness Program Regulations U.S. HR Departments Need to Follow

Employee wellness programs are subject to various regulations. Each covers a different aspect of participatory wellness programs, so it’s important to assess how well your program complies with each one.

HIPAA Wellness Program Regulations

Main Focus: Privacy

Whether HIPAA (Health Insurance Portability and Accountability Act) applies to your wellness program depends on how it’s administered. Under the U.S. Department of Health and Human Services, HIPAA regulations dictate private health information protections and how they’re handled by healthcare clearinghouses, plans and providers. This means wellness plans covered by an organization’s group health insurance are subject to HIPAA regulations. When wellness programs are offered directly by an employer, not an employer’s group health benefit plan, HIPAA security and privacy regulations do not apply. But this does not mean medical information collected for or during the program run by an employer can be freely shared — may well be protected by other federal, state, or local laws. 

IRS Wellness Program Regulations

Main Focus: Taxes

The wellness program regulations set by the Internal Revenue Service (IRS) determine the tax implications for incentives organizations offer as a part of their wellbeing initiatives. The U.S. tax code does not have specific exemptions for wellness programs. The two common wellness program benefits that are not taxable (medical care and fringe benefits) qualify as such thanks to separate regulations. As a result, for example, cash and cash-equivalent rewards given out for participating in a program are taxable. Even though the program is health-related, it does not qualify as a non-taxable medical expense. 

ACA Wellness Program Regulations

Main Focus: Inclusion

Affordable Care Act (ACA) regulations help ensure wellness programs covered by group health plans promote health improvement and disease prevention for all without limiting benefits for workers with pre-existing health conditions. Under ACA regulations, businesses must offer “reasonable alternatives” to employees who fail to meet specific requirements for rewards. 

ADA Wellness Program Regulations

Main Focus: Anti-discrimination

The Americans with Disabilities Act (ADA) prohibits bias and discrimination against people with disabilities. ADA rules aim to ensure that individuals with disabilities have the same opportunities and rights as non-disabled people.

Through the lens of wellness programs, the ADA requires all employee health and wellness programs that call for medical screenings or disability-related inquiries — like Health Risk Assessments (HRAs), or Health Reimbursement Arrangements — to meet two requirements:

  1. They must be voluntary.
  2. They must be designed to “promote health or prevent disease.”

Requiring employees to complete a medical screening to go on a corporate offsite in Hawaii, for example, is not ADA compliant.

GINA Wellness Program Regulations

Main Focus: Incentives for Information

The Genetic Information Nondiscrimination Act (GINA) prevents organizations from hiring or firing based on a person’s genetic makeup. GINA limits what employers can offer staff members in exchange for their dependent spouse’s health information regarding the “manifestation of disease or disorder” as part of the company’s voluntary wellness program.

EEOC Wellness Program Regulations

Main Focus: Autonomy

The U.S. Equal Employment Opportunity Commission’s (EEOC) has multiple proposed rules addressing incentive limits in healthcare plans. Voting on adoption is delayed until Biden-nominated Kalpana Kotagal is confirmed as EEOC chair. 

The proposed rules would:

  • Limit wellness program incentives (like discounts or gym memberships) to 30% of the employee’s individual health insurance premium (total cost of self-only coverage employees pay each month). The percentage increases to 50% if the employee participates in a smoking cessation program.
  • Restrict employers to offering only “de minimis” incentives, or low-cost items like water bottles and $5 gift cards, as the EEOC says high-value incentives may constitute as coercion, which violates the ADA. When wellness programs require employees to take medical examinations or submit answers to medical questions, participation has to be voluntary. 


Wellness Program Regulations Guide the Way

Wellness program regulations are in place to protect employees and their employers. They help HR professionals design inclusive and respectful workplace wellness programs that support employee wellbeing.

As evidenced by the pending EEOC regulations, these rules change over time, so it’s important for human resource departments to keep an eye on how these regulations evolve. Fortunately, you don’t have to navigate this space on your own. If you want help launching a supplemental health plan that meets all wellness program regulations, speak to a Wellhub wellbeing specialist today!



Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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