Final Regulations Regarding Wellness Programs

Final Regulations on Wellness Programs

On May 29, 2013, the IRS, DOL, and HHS released final regulations regarding wellness programs integrated with employer-sponsored health plans. These new regulations apply to all insured and self-insured programs, grandfathered and non-grandfathered plans, and are effective for plan years beginning on and after January 1, 2014. The final regulations divide wellness programs into two categories:


Participatory wellness programs are offered to all similarly situated individuals who do not provide a reward or do not condition said reward on satisfying any standard related to a health factor. These must be made available to all regardless of their health status.


Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. These have a further breakdown into “activity-only” or “outcome-based” programs. Activity-only programs require an individual to complete an activity related to a health factor, such as participating in an exercise program, attending a class, or keeping a food diary. Outcome-based programs require that the individual achieve a certain health outcome, such as not smoking or obtaining specific cholesterol or triglyceride levels. These programs must give all individuals the opportunity to qualify for the reward at least once per year. The reward may not be in excess of 30% (50% if preventing or reducing tobacco use) of the total cost of coverage under the employer’s plan. It must be designed to promote good health or prevent disease, and the reward must be made available to all similarly situated individuals—an alternative must be made available for those who are unable to meet the stated targets, regardless of health status.


Employers who have invested in wellness programs up until 2013 will need to evaluate their programs closely before beginning their 2014 plans to ensure full compliance.