How the Small Employer Wellness Program Tax Credit could help your business Featured

8:01pm EDT April 30, 2011
How the Small Employer Wellness Program Tax Credit could help your business

Savvy business owners are always looking for ways to improve the health of both their employees and their business.

However, for some small businesses, establishing and implementing a comprehensive wellness program may not be financially feasible. But they may find help through the Indiana Small Employer Wellness Program Tax Credit, says Sally Stephens, president of Spectrum Health Systems.

“The purpose of the credit is to help more companies reap the benefits of a healthier work force,” Stephens says. “The credit allows these employers to not only allocate the necessary funds toward wellness but also to consider partnering with a wellness provider to assist them.”

Smart Business spoke with Stephens about how to determine whether your business qualifies for the credit and how it could help your company succeed.

What is the Indiana Small Employer Wellness Program Tax Credit?

The Small Employer Wellness Program Tax Credit, introduced in 2007, provides the financial incentive for small employers to implement a comprehensive wellness program. In doing so, employers can receive a state tax credit of up to 50 percent of the costs incurred by an Indiana small business for providing a qualified wellness program to employees.

The credit is funded by the cigarette tax that was introduced the same year.

How can this tax credit help small employers?

The credit allows many employers who, in the past, did not have the internal resources or could not justify the expense of providing wellness services. The credit now allows them not only to allocate the dollars but also to consider partnering with a wellness provider to assist them with this initiative.

How can an employer determine if it is eligible for the tax credit?

The criteria and application process are well defined on the state website. The tax credit is available to employers with two to 100 employees that have received certification from the Indiana State Department of Health for a ‘Qualified Wellness Program.’

To qualify, the program must offer incentives for weight loss and smoking cessation and offer preventive screenings. According to the state Department of Workforce Development, companies with 99 employees or fewer represent nearly 41 percent of all private sector employment, or more than 1 million employees.

Aside from the financial incentive, how can this initiative help employers?

Creating a work environment that supports healthy behaviors will bring an added benefit to everyone in the company. Wellness initiatives show management support for employees and enhance work culture. An effective wellness plan requires a strong program design, a supportive executive team and an encouraging management culture that supports employee participation.

Because employees are a company’s most valuable asset, investing in their well being can improve employee morale, help prevent turnover and potentially reduce long-term health care costs. A program’s success lies not only with the individual but also requires the support of the corporate leadership.

With the increasing cost of insurance and health care, wellness initiatives are some of the best means of reducing health care risk factors and establishing options for preventive health care. Wellness programs potentially reduce insurance costs and help to improve your employees’ overall well being, both now and in the long run.

What does an employer have to do to qualify for the credit?

The Indiana State Department of Health Advisory Board determines if a company’s wellness program can be qualified for the Small Employer Wellness Program Tax Credit. Once the wellness program is approved, the small employer will receive a certificate via the U.S. Postal Service. This certificate must be submitted to an Indiana tax professional with the employer’s tax documents. Only an Indiana tax professional can determine if the small business is eligible to receive the tax credit and file for it.

To qualify for the tax credit, you must meet the requirements defined by Indiana Code 6-3.1-31.2-3, found at This includes having between two and 100 full-time employees, with a full-time employee defined as one who is employed at least 30 hours each week. A certified wellness program must be designed to improve the overall health of a company’s employees and include an employee-appropriate weight loss program, a smoking cessation program and the pursuit of preventive health care services

What elements must be included in a qualified wellness plan?

Each of the three above mentioned elements must include a detailed description of each area and include assessments, educational materials, a rewards program and a measurement tool. Assessments are evaluation tools used to determine the health status of the employer’s work force, while educational materials provide information to employees about each component of the wellness program and may include brochures, articles, newsletters and a website. Rewards programs provide incentives for motivating employees to participate in the various aspects of the wellness program, and measurement tools evaluate the success and validity of the wellness programs implemented.

Does every employee have to participate in order for a business to earn the credit?

No. However, programs with high participation levels have the best opportunity for achieving a positive return on investment, improved employee outcomes, reduced absenteeism and a work force that is present on  the job.

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