Regulatory Updates for Wellness Programs and HIPAA Compliance

The regulatory landscape for wellness programs has gained clarity with recent FAQs from the Departments of Labor, Health and Human Services, and the Treasury, issued on August 26, 2026.

This guidance addresses key aspects of the Health Insurance Portability and Accountability Act (HIPAA) wellness program rules, particularly in light of over 80 class action lawsuits claiming some programs violate HIPAA by imposing tobacco use surcharges, potentially also breaching the Employee Retirement Income Security Act of 1974 (ERISA). The central issue is whether these surcharges should be retrospectively removed for past tobacco users who complete alternative wellness standards, such as tobacco cessation courses.

Regulatory Clarifications and Their Impact

The FAQs clarify that the departments will not enforce actions against wellness programs that offer rewards only on a prospective basis, provided these programs comply with existing wellness regulations. This clarification comes amidst legal disputes over whether the “same, full reward” language in regulations requires retroactive reimbursement for those who complete a wellness alternative after an initial surcharge.

While these guidelines offer some relief to employers by providing a clearer path forward, the possibility of varying judicial interpretations remains. As a result, legal consultants recommend that employers carefully align their programs with the outlined guidelines, particularly those contemplating retroactive adjustments to surcharges.

Disclosure Requirements for Wellness Programs

Moreover, the FAQs underline the importance of disclosing the availability of reasonable alternative standards within any plan materials that describe wellness programs. Employers are required to include contact information and confirm any physician-recommended accommodations. It is worth noting that materials merely mentioning wellness programs without specifics do not need to meet these notice obligations.

• Programs must comply with the alternative standards disclosure.
• Plan materials should include contact details for further information.
• Employers should verify alignment with physician-recommended accommodations.

What Employers Should Do Next

Employers are encouraged to review their wellness program communications to ensure adherence to these disclosure requirements. While the FAQs aim to alleviate some compliance concerns, companies should stay alert to any legal updates that could necessitate adjustments. The Duane Morris Institute plans to hold a webinar on October 21, 2026, to discuss these recent updates, focusing on prospective wellness rewards and notice requirements amid ongoing litigation challenges.

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