Legislative lowdown: Federal agencies issue guidance on wellness programs

Federal agencies recently issued guidance clarifying how they will enforce laws related to wellness programs, such as those aimed at incentivizing workers to quit smoking or lose weight.

Under federal law, employers can charge smokers up to 50% more for their health premiums.

But these practices have recently been subject to lawsuits alleging they violate the Employee Retirement Income Security Act (ERISA).

Typically, employers remove tobacco surcharges after an employee meets a “reasonable alternative standard” satisfying the requirements of the program, such as a tobacco cessation course. Recent lawsuits have argued that employers should grant retroactive rewards as well, though, to account for any premium surcharges employees incurred before they completed this alternative standard requirement.

Employers need not pay employees retroactively in order to satisfy legal requirements under the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act, according to guidance issued by agencies including the Department of Labor.

The guidance should make clear to plan sponsors and issuers that so long as wellness programs are “reasonably designed, and otherwise non-discriminatory…they will not be penalized for wanting to help motivate the people they cover to make efforts to improve their health,” Assistant Secretary for Employee Benefits Security Daniel Aronowitz said in a statement.

Making sense of this guidance. The FAQ page, which was issued by the DOL in coordination with the Departments of Health and Human Services and Treasury, may inform how HR teams design wellness programs for their companies.

The types of wellness programs covered in the guidance are common across many workplaces. As of 2025, 83% of firms with 200 or more workers offered programs that covered smoking cessation, weight management, behavioral or lifestyle coaching, or a combination of the three, according to KFF.

The share of employers offering smoking cessation programs declined between 2021 and 2025, from 34% to 20%, according to SHRM.