How much can you reward employees for wellness?
Federal rules cap rewards and penalties tied to health-contingent wellness programs. Enter your coverage cost to see the cap and the likely cost of your program.
Wellness incentive limit
Enter the total cost of employee-only coverage, both employer and employee share, and pick the program type.
Your estimate
Estimates only. Results depend on the figures you enter and on your plan documents. Not tax, legal or financial advice.
What the limit covers
Wellness programs that only ask employees to take part, such as attending a seminar, are not capped. Programs that depend on a health outcome, such as a biometric target, are capped at 30 percent of the total cost of employee-only coverage. Tobacco programs can reach 50 percent.
Why it matters
A reward that is too large can create a compliance problem, and one that is too small will not change behavior. Knowing the cap lets you design a program that stays inside the rules and still gets used.
Common questions
Does the limit include the employer share?
Yes. The cap is based on the total cost of coverage, the employer and employee share together, not only the employee paycheck deduction.
Do participation-only programs have a limit?
No federal dollar limit applies to programs that reward participation without requiring a health result, though they must be offered to all similarly situated employees.
Do other laws apply?
They can. Disability, genetic information and state laws may add rules. Have your attorney review the program design before launch.
Can the incentive be a premium discount?
Yes. Incentives often take the form of a premium reduction, a contribution to a health account or a cash reward, and all count toward the cap.
Laws and rules referenced
29 C.F.R. § 2590.702(f) — Wellness program rules; incentive limits of 30% of the cost of coverage, or 50% for tobacco programs, in paragraph (f)(5).
42 U.S.C. § 12112(d) — Americans with Disabilities Act: limits on employer medical inquiries and exams, including in voluntary wellness programs.
42 U.S.C. § 2000ff-1(b) — Genetic Information Nondiscrimination Act: genetic information may be requested only through voluntary wellness programs.
This tool gives estimates for education, not tax or legal advice. Rules change, so confirm your situation with a qualified advisor.
Talk to us about your numbers
Book a 30-minute call and we will check these figures against your plan, your carriers and your goals. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853.
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