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Regulation and Compliance > Federal Regulation > IRS

IRS urged to pump up wellness incentives under PPACA

By Dan Cook

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The Internal Revenue Service needs to greatly expand the number of wellness plan incentives that will count towards the “affordability” standard to which corporations will be held by the Patient Protection and Affordable Care Act.

So argued the 1,500-member-strong ERISA Industry Committee in a letter this month to the IRS. The federal tax agency is responsible for overseeing corporate compliance with the affordability requirement of the PPACA.

Expanding the list wouldn’t take much; it’s currently a list of one.

The cost of smoking cessation programs is the only wellness plan incentive employers can count toward the 9.5 percent affordability ceiling when (and if) the act takes full effect as now scheduled in 2015.

The idea behind the incentive is to give employers who help workers quit smoking a bonus for doing so.

The program cost is subtracted from the overall cost of coverage when the IRS crunches the numbers to see whether an employer has offered an employee coverage that is less than 9.5 percent of his or her household income.

ERIC believes there are many more incentives that should be counted so that companies are encouraged to offer more of these opportunities to improve worker health.

“ERIC urges the IRS to modify the proposed rules to provide that the value of all wellness incentives – and not just those related to tobacco use – are taken into account for purposes of determining affordability of an employer-sponsored plan and whether the plan provides minimum value,” the letter stated.

“Under the current proposal, affordability of an employer-sponsored plan and whether a plan provides minimum value are determined without taking wellness incentives into account, except those relating to tobacco use.”

In the letter, ERIC President Scott Macey and ERIC Senior Vice President for Health Policy Gretchen Young underscored the need to reward companies that go the extra mile for employee health.

“The selective recognition of wellness incentives, as proposed in these regulations, discourages the most effective and efficient use of wellness programs by those employees who would most benefit from incentives to become healthier,” they said. “Companies should not be penalized for trying to reduce the cost of health care through the effective use of wellness programs that comply with all the protections and safety valves required in the final wellness regulation.”

To date, ERIC has not received a response from the IRS, ERIC spokesman Ted Godbout said.

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