Something unusual happened to wellness program incentive law in 2018: the rules disappeared. The EEOC's incentive limit provisions, which had allowed employers to offer incentives worth up to 30% of self-only coverage, were vacated by a federal court and never replaced. Since then, employers have been operating in a regulatory void, making their own judgment calls about how much is too much.
That void still exists today. And it's now more complicated, because GLP-1 medications like Ozempic and Wegovy have created a new category of incentive exposure that most employers, and many of their vendors, have not recognized yet.
Meanwhile, a separate trend is reshaping the incentive conversation from the bottom up. According to WTW's 2025 analysis, only 48% of employers now offer well-being financial incentives, down 10 points in two years, and employees rate employer wellness programs with a Net Promoter Score of -20. The era of paying people to participate is quietly ending.
Here's what HR managers and benefits professionals need to know heading into their next program renewal.
The EEOC Rule Void: Where Incentive Law Actually Stands.
The legal situation for wellness program incentives is genuinely unusual, and it's worth understanding the timeline before making any decisions about your program structure.
| Year | What Happened |
|---|---|
| 2016 | EEOC issued final rules allowing incentives up to 30% of self-only coverage cost for programs involving medical inquiries (HRAs, biometric screenings). |
| 2018 | A federal court vacated the incentive limit provisions. The EEOC removed them from the rules, effective January 1, 2019. |
| 2021 | EEOC proposed new rules suggesting "de minimis only" incentives (a water bottle, a modest gift card) for programs involving disability-related inquiries. Those rules were later withdrawn. |
| Today | No maximum is defined. The legal standard is effectively: "Would a reasonable person feel they had no real choice but to participate?" A subjective test with real litigation exposure. |
The practical implication: programs requiring medical inquiries, health risk assessments (HRAs), biometric screenings, carry meaningful ADA risk if they're attached to large financial incentives. The ADA's voluntary participation requirement is the live wire here. Programs that don't require medical inquiries (step challenges, coaching engagement, participation-based activities) face considerably less exposure.
The absence of a clear rule is not a green light. It's a litigation grey zone. Any incentive tied to an HRA or biometric screening could be challenged under the ADA's voluntariness standard, and there's no bright-line defense available.
The GLP-1 Compliance Trap Most Employers Are Missing.
This is the newest and least understood compliance risk in wellness program design. As employers increasingly offer GLP-1 medications like semaglutide as part of their benefits, a new category of legal exposure has emerged at the intersection of drug access and wellness program participation.
The "Subsidized Medication as Incentive" Problem
When employers condition access to GLP-1 coverage on participating in a wellness program, the medication itself can function as the incentive, potentially triggering HIPAA's health-contingent wellness program rules even when no explicit cash reward is offered. Most vendors building these programs do not flag this risk.
Per compliance analyses from NFP and Trucker Huss, the issue is straightforward: HIPAA's wellness program rules apply whenever a reward is tied to a health standard or program participation. A subsidized medication with significant cost value meets that threshold. If your GLP-1 program was designed primarily by your PBM or carrier without a dedicated compliance review, this is worth examining before your next renewal.
The ADA and Obesity Question
Most federal circuit courts have held that obesity alone is not a disability under the ADA. However, when obesity results from an underlying condition, such as diabetes, metabolic syndrome, or hypothyroidism, it likely is covered. Courts are currently considering whether excluding GLP-1 coverage for weight loss constitutes disability discrimination, though no final rulings have been issued as of early 2026.
Guidance from Morgan Lewis (January 2026) recommends that employers apply GLP-1 plan rules consistently, document their clinical rationale for coverage decisions, and ensure coverage terms do not explicitly limit access based on disability status. Employers offering GLP-1s as a wellness reward should get a dedicated compliance review before their next plan year.
For a deeper look at GLP-1 coverage and ADA obligations, see our guide: GLP-1 Coverage and the ADA: What Every Employer Needs to Know Before Open Enrollment.
2026 Compliance Checklist: Seven Questions Before Your Next Renewal.
Run through these before finalizing your incentive program structure for the upcoming plan year. Programs that have not been reviewed since the EEOC rules were vacated in 2019 are the most exposed heading into renewal.
- Does your program require medical exams or disability-related inquiries (HRA, biometrics)? If yes, significant cash incentives carry ADA voluntary participation risk.
- Are incentives tied to health outcomes, such as achieving a BMI, cholesterol level, or other clinical metric? These trigger HIPAA's health-contingent rules: maximum 30% of self-only coverage, reasonable alternatives required.
- Do you offer GLP-1 coverage tied to wellness program participation? Get a compliance review. The medication may itself constitute the incentive under HIPAA.
- Are your incentive amounts consistent across your employee population regardless of disability status? Disparate impact creates ADA exposure.
- Have you provided employees the required ADA written notice explaining what health data is collected, how it is used, and who receives it?
- Is your program reasonably designed to promote health, not primarily to shift costs to employees? Cost-shifting design intent is a compliance vulnerability on its own.
- Are you applying eligibility rules consistently regardless of whether an employee has a disability? Inconsistent application across a protected class is a litigation risk.
Not sure how your current program structure maps to these? A wellness specialist can walk through it with you. Talk to a wellness specialist.
Why Cash Rewards Are Losing Ground, and What the Research Actually Says.
Financial incentives are declining not just because of legal risk, but because a growing body of evidence shows they underperform as a long-term engagement strategy. Understanding why matters for designing something better.
The Participation vs. Change Problem
Financial incentives are good at one thing: getting people to show up. They work reliably for first actions, such as scheduling a biometric screening, completing an HRA, or signing up for a challenge. The problem is what happens next.
A 2025 research synthesis published in Annual Reviews found that financial incentives rarely lead to sustained behavior change after payments stop. Participants tend to return to baseline behaviors once the reward is removed. The four constructs with the strongest evidence for sustaining change are habit formation, social norms, motivation quality, and reinforcing feedback loops.
Self-Determination Theory (SDT), the dominant framework in health behavior research, explains the mechanism. When people experience a behavior as externally controlled ("I'm doing this for the reward"), it produces the least durable form of motivation. When a behavior is internalized and connected to personal values, identity, and genuine goals, it is significantly more likely to persist. For more on why financial rewards undermine long-term wellness, see our deeper behavioral science breakdown.
Consider what this looks like in practice. A 200-person financial services company drops its HRA-linked incentive and replaces it with monthly team challenges and a library of self-directed courses. Participation does not crater. It increases, because employees are choosing activities that matter to them rather than completing a checklist to protect a premium discount. That shift in design logic is what the research is pointing toward.
When Financial Incentives Do Work
The evidence does not say financial incentives are always harmful or useless. The nuance matters, particularly for program designers.
A 2019 randomized controlled trial (N=153) found that small financial incentives designed around behavioral economics principles actually increased both intrinsic and extrinsic motivation for weight management. Critically, weight regain trajectories did not significantly differ between the incentivized and non-incentivized groups after payments stopped. Design matters enormously.
The Incentive Research Foundation's analysis identifies conditions under which financial incentives work well: when the target behavior has low baseline participation, when the incentive type matches the audience, when the incentive is paired with meaningful program content that builds habits, and when employee choice is preserved.
The key distinction: incentives work best as triggers, a well-timed push that gets someone started. They fail when they become the entire architecture of a program. See also: why GLP-1 programs need behavioral coaching to produce lasting outcomes beyond the medication itself.
What to Use Instead: Six Behavioral Levers That Outlast Cash.
WTW's HR Executive analysis (November 2025) offers an evidence-based framework for employers scaling back financial incentives without sacrificing engagement. These six behavioral science principles are supported by the same research base that underpins effective behavior-change programs.
According to SHRM's 2025 Benefits Survey, programs that integrate physical, emotional, and financial well-being with genuine employee choice are driving higher engagement and retention than traditional points-for-rewards models. The one-size-fits-all incentive era is ending, and the employers making the transition proactively are better positioned than those waiting for their participation numbers to drop first.
How Avidon Health Approaches Incentive-Driven Wellness.
Avidon's behavior-change methodology is built on the same frameworks the research identifies as most effective: cognitive behavioral training, Self-Determination Theory, and habit formation, not transactional reward structures.
The platform gives employees genuine choice: 40+ courses, 700+ resources, monthly challenges, trackers, and coaching pathways. Employees engage with what's relevant to them, not a compliance checklist designed to hit a participation metric. That's the difference between a program people do because they want to, and one they do to avoid losing a premium discount.
For HR managers concerned about the compliance landscape, Avidon's participatory structure, challenges, coaching engagement, and habit tracking, operates largely outside the zone of ADA risk that applies to programs tied to medical inquiries. Participation-based incentives carry meaningfully less exposure than outcome-based or HRA-linked programs.
Challenges Autopilot launches monthly wellness challenges automatically, with no HR administration required. Social leaderboards, team goals, and streaks build the habit formation and social accountability that the research identifies as the most durable engagement drivers, without requiring a financial reward to keep the engine running.
