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Most Common Pitfalls With Wellness Program Compliance in the Post-COVID Workplace

July 26, 2021 (4 min read)

By Elias Kahn

Millions of Americans are now headlong into the process of returning to their respective workplaces after nearly 18 months of pandemic-required lockdowns and business disruptions. One of the unpleasant truths to accompany this post-COVID return to work is that many of those workers are now bearing the health scars—both mental and physical—of those difficult months.

A March 2021 survey of 49,000 people living in eight different countries found that 57% of adults experienced some COVID-19-related adversity or trauma. Moreover, one in four showed clinical signs or were at risk for a mood disorder, and only 40% described themselves as “succeeding or thriving” in life right now.

This long-term fallout on the mental and physical well-being of individuals is an important challenge for employers to address. Research illustrates that a comprehensive wellness program can be an effective tool for companies to assist their valued employees and provide help to the organization’s financial performance in the process.

“An effective employee wellness program can result in reductions in sick leave absenteeism, employee use of health care benefits and worker’s compensation claims,” according to the Association of Corporate Counsel. “Employee wellness programs can also yield large dividends, resulting in a rate of return from $1.49 to $4.91 for every dollar spent.”

Indeed, the ability to help your employees navigate their post-COVID health challenges can move the needle on the company’s profitability in the years ahead.

“It should come as no surprise that healthy employees boost a company’s bottom line,” reports Forbes. “According to the Centers for Disease Control, more than 75% of employers’ health care costs and productivity losses are related to employee lifestyle choices. And a $1 investment in wellness programs saves $3 in health care costs, according to the Wellness Council of America.”

Wellness Program Compliance

Designing and operating a corporate wellness program requires in-house counsel to carefully consider a number of compliance obligations. There are a variety of federal laws that come into play when building or reviewing your organization’s specific program.

For example, consider some of the landmark legislation you will need to navigate: the Employee Retirement Security Act of 1974 (ERISA); the Internal Revenue Code of 1986 (IRC); the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA); the Health Insurance Portability and Accountability Act of 1996 (HIPAA); the Patient Protection and Affordable Care Act of 2010 (ACA); the Genetic Information Nondiscrimination Act of 2008 (GINA); and the Americans with Disabilities Act of 1990 (ADA).

These are some of the relevant statutes that affect employee health programs, your legal requirements as an employer and the key regulatory considerations you need to understand as you design and implement your company’s wellness program. There are a number of LexisNexis® legal research and information resources available—including a comprehensive practice note from Troutman Pepper LLP attorneys Emily D. Zimmer and Lynne Wakefield—to help inform your in-house team and outside counsel.

10 Common Pitfalls

Drawing from Zimmer and Wakefield’s experience, here are the most common pitfalls for in-house counsel to avoid with employee wellness program compliance in the post-COVID workplace:

  1. Failing to recognize when a wellness program is providing medical care, and thus must comply with applicable group health plan requirements
  2. Structuring a wellness program that is a group health plan as a stand-alone plan without carefully considering how that stand-alone plan will comply with all applicable legal requirements
  3. Not having a summary plan description (SPD) for a stand-alone wellness program that is a group health plan, or failing to include information in a medical plan’s SPD about any wellness program that is part of that plan
  4. Failing to offer COBRA with respect to a wellness program that is itself a group health plan or is part of a group health plan
  5. Offering a reward (or penalty) that exceeds the applicable limits under the HIPAA non-discrimination rules
  6. Refusing to entertain the recommendation of an individual’s physician in designing a reasonable alternative standard for the individual
  7. Requiring a biometric screening as a condition of medical plan enrollment, or imposing a penalty so large as to call into question the voluntary nature of the screening under the EEOC’s ADA wellness program regulations codified at 29 C.F.R. § 1630.14(d)
  8. Not having a HIPAA business associate agreement in place with third-party service providers, when required, if the program is itself a group health plan or is part of a group health plan
  9. Failing to tax a cash or other taxable reward that is not eligible for exclusion from employees’ income under the Internal Revenue Code
  10. Providing a reward or penalty based on whether an employee’s spouse completes a health risk assessment (HRA) that includes medical history questions in a manner inconsistent with GINA

The best way to protect your organization from some of these common pitfalls is to conduct periodic reviews of the company’s entire employee wellness program, given the complexities and evolving landscape of legal compliance obligations. These regular reviews of the program design can help ensure compliance with all applicable requirements and mitigate against various risks, such as employee litigation and regulatory enforcement actions.


As millions of American workers return to their places of employment this year, a majority of them are doing so after having suffered some sort of COVID-related trauma. Some of these experiences involve a physical difficulty, and some involve a mental health challenge; all of them are very real wounds that need to be addressed and appropriately treated for your valued employees to thrive.

This is also an important bottom line consideration, as workers who receive the wellness assistance they need will reduce the company’s health care costs and are more likely to contribute positively to the organization over the long-term.

LexisNexis® has created a complimentary resource to help guide in-house counsel through the process of implementing an employee wellness program that complies with all relevant laws and regulations. To download our complimentary Wellness Programs Checklist, please click here.