December 2018

2019 Wellness Incentive Program Planning

Employers have been using wellness programs to promote better health among employees and help control health care costs for a number of years. Wellness incentive programs are regulated by multiple federal agencies. A consistent set of rules adopted under the Affordable Care Act (ACA) by the Department of Labor (DOL), Health and Human Services (HHS), and the Internal Revenue Service (IRS) were made effective January 1, 2014. Rules adopted in 2016 by the fourth agency, the Equal Employment Opportunity Commission (EEOC), under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) have resulted in some uncertainty about the allowable limits on total incentive value.

The incentive limits in EEOC’s 2016 rules were challenged by the American Association of Retired Persons (AARP) as being too high and potentially coercive. The D.C. District Court found the limits to be insufficiently justified, and issued an order to vacate the rules on January 1, 2019 if clarification or new rules were not issued. The EEOC has not provided insight on an anticipated date for revision or action on the rules. Therefore, the existing incentive limits in the EEOC rules will be vacated and be no longer effective as of January 1, 2019.

Employers planning high-value or high-dollar wellness program incentives in their 2019 plans should consult with their plan counsel for help in considering the risks of applying incentives close to, or up to, the 30% value. This consultation can help employers balance the strength of incentives with the participants’ satisfaction and overall reasonableness of the program design. Here are some suggested discussion points for employers and their counsel:

  • Consider removing any program steps or requirements that create unnecessary “hoops” and don’t contribute to health promotion. The program should not be burdensome to the point where participants will not feel it is voluntary.
  • Consider using positive rewards rather than penalties (“carrots” versus “sticks”) to reduce the likelihood of unhappy participants. Strive to reinforce a positive view and reinforce the voluntary standard.
  • For programs that require a measured health outcome or physical activity (“health contingent” programs), consider the difficulty of the threshold measurement or activity across the population, and ensure that the mandated “reasonable alternatives” are not burdensome.
  • Consider reducing the overall incentive limit; for example a 20% incentive ceiling was in place before the agencies revised their current rules (but note: any incentive limit could be challenged if the program overall is considered unreasonable).

It is important to note that after the incentive limits are vacated, the remaining sections of the ADA and GINA rules (e.g., ADA’s reasonable accommodations and GINA’s limited use of collecting genetic information) will stay in effect. If you need more information on incentives and other wellness program rules, please visit the Wellness Programs and Incentives page on