Overview: Employers use wellness programs to supplement their employee benefit programs in an effort to prevent illness and lower health care costs by motivating employees to adopt and maintain healthful behaviors. Studies have shown that employers can benefit by implementing and maintaining an employee wellness program. Over time, benefits reported by employers include reduced health care related costs, increased productivity, reduced absenteeism, higher morale and increased employee retention.
The type of wellness program offered depends on a variety of factors including an employer's size, culture, resources and industry. Some programs are simple and inexpensive to implement and manage, while others are more complex and require substantial financial resources.
Most wellness programs are aimed at combating preventable conditions such as obesity, diabetes, heart disease and lung cancer. There are many types of wellness programs an employer can choose based on budget, employee demographics, location and health goals. Common examples include:
Employer wellness programs must comply with a variety of federal and state laws. At the federal level, wellness plans have to comply with the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).
Trends: Affordable Care Act provisions that apply to plan years beginning on or after January 1, 2014, expand an employer's ability to reward employees for participating in wellness programs.
Tracy Morley, SPHR, Legal Editor
Enhanced to improve the organization and provide additional expository information.
Updated to reflect developments regarding contraceptive coverage under the Affordable Care Act.
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Updated to reflect the removal of vacated EEOC regulations on wellness program incentives, effective January 1, 2019.
Two IRS Chief Counsel Advice Memoranda provide good examples of the tax ramifications of wellness program benefits provided under various scenarios.
As mandated by the Equal Employment Opportunity Commission, an employer that offers a wellness program that collects employee health information must provide a Notice for Employer-Sponsored Wellness Programs.
Updated to reflect information on the Patient Protection and Affordable Care Act's maximum annual limitation on cost sharing.
An employer should use this waiver when it offers employees the opportunity to participate in voluntary wellness program activities.
HR guidance on workplace wellness programs and the impact to health care costs.