Federal Agencies Issue Wellness Program FAQs Amid Litigation
Labor, HHS and Treasury clarify that employers need not retroactively reimburse tobacco users who meet reasonable alternative standards, but must disclose those options in plan materials.
The U.S. Departments of Labor, Health and Human Services and the Treasury released FAQs on August 26, 2026, clarifying the HIPAA wellness‑program rules that have sparked more than 80 class‑action suits over tobacco‑use premium surcharges. The guidance grants enforcement relief to plans that reward employees only prospectively—i.e., after a participant satisfies a reasonable alternative standard such as a cessation course—while still requiring full disclosure of those alternatives in all plan materials that describe the wellness program. This relief addresses a split in federal district courts over whether the preamble’s “same, full reward” language compels retroactive reimbursement, potentially reducing liability for large corporate sponsors. Sophisticated counsel should audit existing wellness designs, update participant communications to include contact information and physician‑accommodation statements, and monitor upcoming court decisions that may treat the FAQs as binding. The next development to watch is how appellate panels interpret the agencies’ positions, which could influence the trajectory of the ongoing class‑action litigation and future rulemaking.