On August 26, 2026, the Employee Benefits Security Administration (EBSA) on behalf of the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, “the Departments”) issued new guidance addressing ongoing litigation involving tobacco surcharges in employer-sponsored health plan wellness programs.

The guidance confirms that, pending further regulations, federal agencies will not take enforcement action against plans that provide wellness incentives prospectively, rather than retroactively to the beginning of the plan year, when participants satisfy a reasonable alternative standard (RAS) to earn a reward. This position provides welcome flexibility for plan sponsors that offer tobacco cessation and other health-contingent wellness programs.

Plan sponsors should continue to ensure that health-contingent wellness programs are reasonably designed, non-discriminatory, and offer a reasonable alternative standard for individuals who cannot meet the applicable health standard.

The guidance also clarifies that plan materials that merely reference the availability of a wellness program, without describing its terms, are not required to include notice of the reasonable alternative standard.

Employers may wish to review existing wellness program communications and tobacco surcharge administration practices to confirm alignment with the agencies’ enforcement approach.

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