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Financial Penalty Assessment

Meaning

Financial Penalty Assessment is the formal process of calculating and applying a monetary charge or loss to an individual based on their failure to meet predefined health metrics or participate in specific health-related activities within a structured wellness program. This assessment is a mechanism used by employers or health plans to incentivize health behavior change through economic disincentives. The resulting penalty, often manifested as higher insurance premiums or increased deductibles, is a direct consequence of the individual’s measured health status. This practice operates within strict regulatory guidelines to prevent discrimination.