Incentive Regulations Can Be Scary - Don't Get Spooked

By Lisa Suter

It’s a scary time of year for many employers and health plans (and we’re not referring to Halloween)!

With the release of the new EEOC rules earlier this year and the recent clarification by the IRS regarding taxability of incentives, many of our clients are spooked as they get ready to launch their 2017 wellness programs.

Even more frightening is a recent AARP lawsuit against the EEOC seeking to stop the enforcement of final rules for workplace wellness programs claiming they violate anti-discrimination laws aimed at protecting workers’ medical and genetic information. In addition, AARP also alleges such programs are not voluntary when the price of not participating can be high and be considered a financial burden to employees. Given these unsettling times, it’s important to have a strategy in place to ensure your programs remain compliant throughout the year.


Here are three important steps employers should take to ensure their wellness programs are compliant, which are as fundamental as the three R’s:

1. Review and Refresh

Review and shake out the cobwebs of your wellness program every year to ensure it meets all compliance requirements. Key questions you should ask are:

  • Have there been any recent changes to compliance requirements that may impact my program?
  • Are any of the current or newly proposed elements of my program out of compliance?
  • Do I need to consider any pending legislation, regulations, or lawsuits that may impact my program?

This year, some of the changes that may need to be made include:

  • Reducing the amount offered to employees to ensure the program is within the 30% cap
  • Implementing administrative processes necessary to withhold and report tax liability for rewards earned by employees
  • Updating program materials and websites to provide the required notifications regarding availability of alternatives, as well as how participant’s health data will be gathered and used

Take the time to review and refresh your wellness rewards program to not only avoid government scrutiny but also achieve the desired cost, health and engagement results you want.

2. Respect the Requirements

Several laws, and regulations interpreting them, impose requirements on employer-administered wellness programs, including the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA), the Patient Protection and Affordable Care Act (ACA), and the Genetic Information Nondiscrimination Act (GINA).

As if all of the acronyms themselves weren’t difficult enough to keep straight, the requirements have an added layer of complexity for certain populations, such as Medicare. It’s critical to understand and respect all the requirements to ensure your program remains compliant. To help better understand some of the recent changes, click here.

3. Right Partnership

While larger employers may have consultants, legal staff or outside counsel available to help navigate the scary waters of regulatory compliance, most employers don’t have the resources to tackle this important task. That’s why it’s important to find a partner that will not only provide a platform and process administration that is compliant, but one that can also keep you informed of changes to the compliance landscape and how it impacts your program design, as well as provide guidance on how to build a strategy that not only meets compliance requirements but also organizational goals and objectives.

There’s much to consider when determining if your wellness program is compliant. While it can seem like a daunting and somewhat haunting task, you are not alone.

Additional resources:

AARP Sues U.S. Over Rules for Wellness Programs

EEOC's Final Rule on Employer Wellness Programs 

What Every Tax Department Needs to Know About Wellness Programs