Participatory vs. Health-Contingent Incentives
| Type | Definition | HIPAA Limit | Reasonable Alternative Required? |
|---|---|---|---|
| Participatory | Reward for participation only (completing HRA, attending health fair) | No limit | No |
| Activity-only health-contingent | Reward for performing an activity (walking 10,000 steps/day) | 30% of employee-only premium | Yes |
| Outcome-based health-contingent | Reward for achieving a health outcome (BMI <25, non-smoker) | 30% of employee-only premium (50% for tobacco) | Yes |
The Reasonable Alternative Standard
Health-contingent wellness programs must offer a reasonable alternative standard for employees who cannot meet the health standard due to a medical condition. The alternative must be reasonably designed to promote health, must not be overly burdensome, and must be available to all employees who request it.
Incentive Design Strategy
IQ Insight
The most effective wellness incentive strategy combines participatory incentives (for engagement) with health-contingent incentives (for outcomes). Participatory incentives drive broad engagement — completing the HRA, attending the health fair, using the EAP. Health-contingent incentives drive specific behavior changes — quitting tobacco, losing weight, controlling blood pressure. Together, they create a comprehensive incentive structure that drives both engagement and outcomes.