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Tax Credit Offers Incentive to Employers for Wellness Programs

Posted on January 11, 2013

Massachusetts employers with wellness programs may now qualify for a state tax credit equal to 25 percent of the cost of the plan, to a maximum of $10,000.  Under regulations issued on Wednesday, a credit is available to Massachusetts-based employers with up to 500 employees (the majority must work in Massachusetts).  Out-of-state employers with up to 500 Massachusetts employees may qualify as well.   
Wellness.Exercise.SmallYou must have an existing wellness program that promotes “a healthy workplace environment and healthy workplace habits.” Qualifying programs must be based on “a health-risk assessment of the workforce” and could include features such as nutrition, smoking cessation, disease and accident prevention or other aspects that improve the “physical and mental health and well being” of participants.

The tax credit is part of the health care cost control law signed by Governor Deval Patrick in August. State officials expect to have an application process in place for the credits by spring, but employers should prepare now to ensure they will be able to take advantage of the benefit.

  • Employers will seek to qualify for the credit by completing an application process detailed in the regulations. The Department of Public Health is working on draft guidance and the application form now.  They expect to have the drafts ready by February 1 and to begin accepting applications in the spring. Every employer who “submits sufficient documentation of its implementation of an eligible wellness program” prior to the annual application deadline (and until the total amount allocated by statute is expended) will receive an annual certification number to be used with its annual tax filing.
  • There is an annual limit to the amount of funds available for wellness program tax credits.  Applications will be approved on a first-come, first-served basis, so employers should be ready to submit their forms as soon state officials begin to accept them.  The commonwealth may also manage the allocation of funds by creating a waitlist and giving priority to employers who received approval in the previous year and to employers with fewer than 100 employees. 

Interested employers with existing wellness programs should review the regulations to ensure that their program meets the requirements for the credit.  Employers considering a program should also review the regulations.  The requirements include evidence-based screening, education and activities aligned with current research and statistics.  Once certain that the program meets the requirements for the tax credit, employer should complete the application process and get to the front of the queue.  
AIM provided guidance in the development of these regulations. We applaud the state’s receptiveness to our suggestions to make this tax credit available to employers with up to 500 employees and to establish a one-step certification process.   AIM will keep you informed on the development of the application process.