Health-Contingent Wellness Programs
A health-contingent program ties a reward to an activity or a health result, such as walking a set amount or reaching a target. These carry more rules than participatory programs.
What to know.
The rules limit the size of the reward to a share of the cost of coverage, require a reasonable alternative for people who cannot meet the standard, and call for yearly chances to qualify. A higher share is allowed for tobacco programs.
Give employees written notice of the alternative and keep records of who qualified. Ask counsel to review the design before launch.
Where to look next.
Wellness Rewards Overview
How the account works.
Wellness Programs and the ADA
Voluntary participation and incentives.
HIPAA Privacy Rule
Handling health information.
Designing the program so the reasonable alternative is real.
The most common weakness in a health-contingent program is the alternative. It is easy to write that employees who cannot meet the standard may ask for another way to earn the reward, but harder to make that clear in practice. Notices should say it plainly, include a contact and apply to anyone whose health makes the original standard unreasonably difficult or medically inadvisable.
Records matter just as much. Keep a short file showing how the standard was set, how employees were told about it and how many used the alternative. Wellness rules interact with privacy and disability law as well, so have counsel review the design and the notices before you launch.
Common questions on this topic.
Four questions to settle before you rely on it.
What limits the reward?
A share of the cost of coverage, with a higher share for tobacco programs. Check the current rule.
What is a reasonable alternative?
A way for employees who cannot meet the standard to earn the reward.
How often must employees get a chance?
At least once a year.
Does the ADA apply?
Yes. Participation must be voluntary.
Can the program be changed after it starts?
Changes are possible, but employees should receive notice and the reward limits still apply. Ask counsel to review any mid-year change.
What health information can the employer see?
Generally the employer should receive only the minimum needed to run the program, often through a vendor that keeps individual results private. Confirm the setup with counsel.
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General information, not legal or tax advice. Plan-specific questions belong with your counsel or CPA, and we will bring them in.
Related guides.
Wellness Rewards Account
The overview this page belongs to.
Compliance Services
How CFH supports the compliance side of your plans.
Participatory Wellness Programs
A related question on the same program.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
Wellness Program Rules (29 CFR 2590.702)
The health plan nondiscrimination rules for wellness programs.
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