The IRS released proposed new rules which will curb most employer initiated wellness programs from qualifying towards the minimum value for the coverage employers are expected to offer every full-time employee. The wellness programs were said to be discriminatory, due to incentives that not all employees could qualify for which would mean charging more for those who did not qualify under the wellness program for added benefits. Labor unions and employee advocacy groups resisted the wellness programs on this account, urging for the all pay equally position which means that if you are healthy you will still pay as much as someone who is chronically sick.
Under the proposed rule only wellness programs intended to reduce tobacco use can be included when calculating minimum value or how large a share of costs is borne by a health plan instead of the employees. The IRS explained the exception for tobacco cessation programs by pointing to the ACA’s recognition of tobacco’s dangers, allowing for higher premiums to be charged to smokers. Other types of wellness programs, such as those offering reimbursements for employee gym memberships or discounted health premiums for lowering one’s blood pressure, will not count toward minimum value.
Under the ACA, a business with at least 50 full-time employees must provide health benefits to at least 95 percent of its full-time workers. If the employer fails to provide health benefits and one or more full-time employees receives a subsidy to buy coverage on a health insurance exchange, the employer will be forced to make a “shared responsibility payment.” That penalty will amount to $2,000 per year for every full-time employee, with a breathing room exception for the first 30 employees. To offer minimum value, a company must pay for at least 60 percent of the cost of benefits.
The proposed rule making can be found here.
26 CFR Part 1
Published in Federal RegisterMay 3, 2013