Healthy incentives Featured

7:00pm EDT February 23, 2010

If cost is the only factor preventing your business from implementing a wellness program, a bill currently working its way through the legislative process could remove that excuse.

The Healthy Workforce Act would provide a tax credit for businesses that incorporate sound employee health management practices by offering effective and comprehensive wellness programs.

“The act would significantly ease the barriers for both small and mid-sized employers to invest in these programs,” says Sally Stephens, president of Spectrum Health Systems.

Smart Business spoke with Stephens about how the Healthy Workforce Act would affect businesses and how companies could use it to improve the overall health of their workforces.

What is the significance of the Healthy Workforce Act?

The Healthy Workforce Act, if passed, would amend the Internal Revenue Code to allow employers a 50 percent tax credit for the cost of providing employees with a qualified wellness program.

A qualified wellness program is one that is certified by the Secretary of Health and Human Resources. To be qualified, it must consist of the following elements: health awareness and education components, a behavioral change component and a supportive environment component. The act would also require the Secretary of the Treasury to institute an outreach program to inform businesses of the availability of such a wellness tax credit.

On April 2, 2009, the bill was referred to the Senate committee, where it was read twice and referred to the Committee on Finance.

How would the Healthy Workforce Act affect employers?

Today’s negative health trends have a profound impact on the profits and competitiveness of United States businesses. The average employer’s medical costs increased 72 percent between 2000 and 2006. A bill such as the Healthy Workforce Act would provide the financial incentive for employers to implement effective wellness programs that result in improved health and stabilized claims trending.

How does the 2009 version of the act differ from the previous 2007 version?

The 2007 bill was read twice, referred to the Committee on Finance and never became law. In an effort to make wellness and prevention a part of the national discussion on health care reform, some U.S senators and representatives reintroduced the legislation, which aims to fight the growing prevalence of chronic disease and improve the quality of life for the 135 million full-time and part-time workers in the U.S. The 2009 act would provide a tax credit to companies that offer effective and comprehensive wellness programs. Businesses would receive a tax credit for incorporating sound employee health management practices into their plan design, and, as an added benefit, the act would significantly ease the barriers for both small and mid-sized employers to invest in these programs.

How would employers qualify for the tax credit?

To qualify, wellness programs would be required to include health risk assessments, health awareness and behavior change programs, meaningful incentives for participation and an employee committee that tailors programs to meet workforce needs.

The Secretary of Health and Human Services, in conjunction with the Centers for Disease Control and Prevention, certify which programs qualify, but all programs must:

  • Include at least three of the following four components: health awareness, behavior change, employee engagement and supportive environments
  • Use practices that are consistent with evidence-based research and best-practice environments
  • Focus on employee populations with disproportionate health burdens, be culturally competent and meet employees’ health literacy needs
  • Offer all programs to all employees who work at least 25 hours per week

The bill also instructs the Secretary of the Treasury and the CDC to develop an outreach program to make employers aware of the credit and what steps need to be taken in order to qualify.

What incentives do companies have to invest money in programs promoting healthy lifestyles and disease prevention?

Workplace wellness programs are economical. They typically cost from $20 to $200 per employee, and some well-implemented programs produce a return of $10 for every dollar invested.

The tax credit caps at $200 per employee for businesses with fewer than 200 employees. For those businesses with more than 200 employees, the credit caps at $100 per employee. If passed, the Healthy Workforce Act can motivate small and medium-sized employers to get involved in worksite wellness programs.

In the small and medium-sized employer market, the human resources director is wearing a lot of hats. In most cases, that person does not have the time to take away from his or her normal job responsibilities to develop and implement a wellness program. They really need someone else to do it for them. Working with a consultant or outside wellness provider can add cost to any wellness initiative, and this credit can possibly bridge the gap for a company considering this route.

How do wellness programs benefit businesses?

This type of legislation is long overdue. The return on investment from wellness programs can be justified if you take into consideration not only the reduction in health care costs but also the health dividends associated with a healthy workforce such as improved productivity and presenteeism, decreased absenteeism and workers’ compensation costs. In the end, the benefits of a well-designed comprehensive wellness program far outweigh the costs.

Sally Stephens is president of Spectrum Health Systems. Reach her at (317) 573-7600 or