Wellness Programs: HIPAA/ACA, ADA, and GINA

A1.The baseline prohibition

Part 16, ch. 3, § A1

A group health plan may not establish rules for eligibility (including continued eligibility, enrollment, and benefits) or charge an individual a premium or contribution that is greater than that for a similarly situated individual, based on a health factor — health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising from acts of domestic violence, and participation in activities such as motorcycling or other recreational activities), and disability. Wellness programs are the exception to that prohibition, and they are permitted only on the terms the regulation sets. Statute: ERISA §702; PHSA §2705; Code §9802. Final reg: 29 C.F.R. §2590.702; 26 C.F.R. §54.9802-1; 45 C.F.R. §146.121 (the 2013 tri-agency final wellness rule).

A2.The two categories

Part 16, ch. 3, § A2

A participatory wellness program either offers no reward or does not condition the reward on satisfying a standard related to a health factor. Examples: reimbursing fitness-center membership; a diagnostic testing program that rewards participation and not outcomes; waiving a copayment for prenatal or well-baby visits; rewarding attendance at a monthly health seminar; rewarding completion of a health risk assessment without further action. A participatory program complies so long as it is made available to all similarly situated individuals regardless of health status — there is no percentage limit on a participatory reward under this regime.

A health-contingent program conditions the reward on satisfying a standard related to a health factor, and splits in two: an activity-only program requires performing or completing an activity (a walking, diet, or exercise program) but does not require attaining a specific outcome; an outcome-based program requires attaining or maintaining a specific health outcome (a cholesterol, BMI, or non-smoking result). Final reg: 29 C.F.R. §2590.702(f)(1)–(2).

A3.The five conditions on health-contingent programs

Part 16, ch. 3, § A3

1. Frequency. The program must give eligible individuals the opportunity to qualify for the reward at least once per year.
2. Size of the reward. The total reward for all health-contingent programs under the plan may not exceed 30% of the total cost of employee-only coverage (or the cost of the coverage tier in which the individual is enrolled, where dependents may participate), increased to 50% to the extent the additional reward is attributable to tobacco use prevention or reduction.
3. Reasonable design. The program must be reasonably designed to promote health or prevent disease — it must have a reasonable chance of improving health or preventing disease, not be overly burdensome, not be a subterfuge for discrimination based on a health factor, and not be highly suspect in method.
4. Uniform availability and a reasonable alternative standard. The full reward must be available to all similarly situated individuals, which requires offering a reasonable alternative standard (or waiver of the otherwise applicable standard). Whether the "full reward" must be paid retroactively to the start of the plan year is now an enforcement-relief question — see A4.
5. Notice. The plan must disclose the availability of a reasonable alternative standard in all materials describing the terms of the program and, for an outcome-based program, in any disclosure that an individual did not satisfy the initial standard, including contact information and a statement that recommendations of an individual's personal physician will be accommodated. The notice is not required where materials merely mention that a program is available without describing its terms — for example, a summary of benefits and coverage that notes cost sharing may vary with participation in an outcome-based program, without describing its standards, does not trigger it. Agency guidance — informal: FAQs About ACA and HIPAA Implementation Part 74 (Aug. 26, 2026), Q2.

Final reg: 29 C.F.R. §2590.702(f)(3)–(4) (the conditions); §2590.702(f)(5) (the 30%/50% applicable percentage); parallel rules at 26 C.F.R. §54.9802-1(f) and 45 C.F.R. §146.121(f).