Overview
Many employers use wellness programs with incentives to encourage healthier behavior among employees. Federal nondiscrimination rules now require employers to offer reasonable alternatives when a medical condition prevents an employee from meeting an activity-based or outcome-based goal.
Those alternatives let employees still earn rewards or avoid penalties even if they cannot complete the original activity or reach a specific health outcome. The change aims to protect workers with disabilities or health conditions while keeping wellness programs available.
Key takeaways
- Employers must provide reasonable alternative standards for employees who cannot meet activity or outcome targets.
- Alternatives can make incentive programs more inclusive but may affect how outcomes are measured and tracked.
- Documented procedures and individualized evaluations help reduce legal and administrative risk.
How it works
Employers define the wellness activity or health outcome that qualifies for a financial reward or other incentive. Examples include completing a fitness challenge, attending health coaching, or meeting biometric targets.
If an employee cannot complete the defined activity or meet the outcome because of a health condition, the employer must offer a reasonable alternative that still allows the employee to qualify for the incentive.
Small employers and plan sponsors often seek practical templates and compliance guidance to implement alternatives and track participation; one place to review program options is IBA West Program for Small Employers.
What it may cover (and what it may not)
Reasonable alternatives typically involve individualized goals, different activities, or medical-supervised plans that accommodate an employee’s limitations. Employers can use alternatives that are health-contingent in form but not discriminatory in application.
What it does not cover is creating a blanket exemption that undermines program integrity or applying different standards without medical or reasonable justification. Employers should avoid arbitrary alternatives that defeat the wellness objective.
Common mistakes to avoid
Assuming a single, one-size-fits-all incentive design meets nondiscrimination obligations is a frequent error. Programs should include documented options and a clear process for employees to request alternatives.
Failing to train HR staff or to keep consistent records of alternative approvals and participation can increase administrative burden and raise compliance concerns. Also avoid using outcome measures that cannot be reasonably monitored when many employees use alternatives.
Questions to ask an agent
Ask whether your current wellness design includes a defined procedure for evaluating alternative standards and documenting medical limitations. Clear documentation helps demonstrate that alternatives are reasonable and consistently applied.
Request sample program language that explains alternative options to employees and clarifies how incentives are earned. Also confirm how incentives affect plan costs and nondiscrimination testing.
Next steps
Review existing wellness policies and map how alternative standards will be requested, approved, and documented. Consider updating handbooks and benefit notices so employees understand their options and the approval process.
For examples of employer program options and storefront resources, see Consulting Forestry Program. When you are ready to move forward, you can also talk to an agent to review compliance and implementation details.
Frequently Asked Questions
What is a reasonable alternative standard?
A reasonable alternative is a different activity or objective that an employee can complete despite a medical condition and that still qualifies for the wellness incentive.
Who decides if an employee qualifies for an alternative?
Employers should use a consistent process, often involving HR and a qualified health professional, to evaluate requests and approve alternatives.
Will offering alternatives make wellness programs ineffective?
Not necessarily; well-designed alternatives maintain program goals while increasing participation and legal compliance.
Do alternatives require extra documentation?
Yes, employers should document medical accommodations, the alternative offered, and the approval process to support compliance and auditing.