Tax credit to employers for costs of implementing wellness programs

(a)

In General

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following:

45O.

Wellness program credit

(a)

Allowance of credit

(1)

In general

For purposes of section 38, the wellness program credit determined under this section for any taxable year during the credit period with respect to an employer is an amount equal to 50 percent of the costs paid or incurred by the employer in connection with a qualified wellness program during the taxable year. (2)

Limitation

The amount of credit allowed under paragraph (1) for any taxable year shall not exceed the sum of— (A)the product of $200 and the number of employees of the employer not in excess of 200 employees, plus (B)the product of $100 and the number of employees of the employer in excess of 200 employees. (b)

Qualified wellness program

For purposes of this section— (1)

Qualified wellness program

The term qualified wellness program means a program which— (A)consists of any 3 of the wellness program components described in subsection (c), and (B)which is certified by the Secretary of Health and Human Services, in coordination with the Director of the Center for Disease Control and Prevention, as a qualified wellness program under this section. (2)

Programs must be consistent with research and best practices

(A)

In general

The Secretary of Health and Human Services shall not certify a program as a qualified wellness program unless the program— (i)is consistent with evidence-based research and best practices, as identified by persons with expertise in employer health promotion and wellness programs, (ii)includes multiple, evidence-based strategies which are based on the existing and emerging research and careful scientific reviews, including the Guide to Community Preventive Services, the Guide to Clinical Preventive Services, and the National Registry for Effective Programs, and (iii)includes strategies which focus on employee populations with a disproportionate burden of health problems. (B)

Periodic updating and review

The Secretary of Health and Human Services shall establish procedures for periodic review of programs under this subsection. Such procedures shall require revisions of programs if necessary to ensure compliance with the requirements of this section and require updating of the programs to the extent the Secretary, in coordination with the Director of the Centers for Disease Control and Prevention, determines necessary to reflect new scientific findings. (3)

Health literacy

The Secretary of Health and Human Services shall, as part of the certification process, encourage employees to make the programs culturally competent and to meet the health literacy needs of the employees covered by the programs. (c)

Wellness program components

For purposes of this section, the wellness program components described in this subsection are the following: (1)

Health awareness component

A health awareness component which provides for the following: (A)

Health education

The dissemination of health information which addresses the specific needs and health risks of employees. (B)

Health screenings

The opportunity for periodic screenings for health problems and referrals for appropriate follow up measures. (2)

Employee engagement component

An employee engagement component which provides for— (A)the establishment of a committee to actively engage employees in worksite wellness programs through worksite assessments and program planning, delivery, evaluation, and improvement efforts, and (B)the tracking of employee participation. (3)

Behavioral change component

A behavioral change component which provides for altering employee lifestyles to encourage healthy living through counseling, seminars, on-line programs, or self-help materials which provide technical assistance and problem solving skills. Such component may include programs relating to— (A)tobacco use, (B)obesity, (C)stress management, (D)physical fitness, (E)nutrition, (F)substance abuse, (G)depression, and (H)mental health promotion (including anxiety). (4)

Supportive environment component

A supportive environment component which includes the following: (A)

On-site policies

Policies and services at the worksite which promote a healthy lifestyle, including policies relating to— (i)tobacco use at the worksite, (ii)the nutrition of food available at the worksite through cafeterias and vending options, (iii)minimizing stress and promoting positive mental health in the workplace, (iv)where applicable, accessible and attractive stairs, and (v)the encouragement of physical activity before, during, and after work hours. (B)

Participation incentives

(i)

In general

Qualified incentive benefits for each employee who participates in the health screenings described in paragraph (1)(B) or the behavioral change programs described in paragraph (3). (ii)

Qualified incentive benefit

For purposes of clause (i), the term qualified incentive benefit means any benefit which is approved by the Secretary of Health and Human Services, in coordination with the Director of the Centers for Disease Control and Prevention. Such benefit may include an adjustment in health insurance premiums or co-pays. (C)

Employee input

The opportunity for employees to participate in the management of any qualified wellness program to which this section applies. (d)

Participation requirement

(1)

In general

No credit shall be allowed under subsection (a) unless the Secretary of Health and Human Services, in coordination with the Director of the Centers for Disease Control and Prevention, certifies, as a part of any certification described in subsection (b), that each wellness program component of the qualified wellness program applies to all qualified employees of the employer. The Secretary of Health and Human Services shall prescribe rules under which an employer shall not be treated as failing to meet the requirements of this subsection merely because the employer provides specialized programs for employees with specific health needs or unusual employment requirements or provides a pilot program to test new wellness strategies. (2)

Qualified employee

For purposes of paragraph (1), the term qualified employee means an employee who works an average of not less than 25 hours per week during the taxable year. (e)

Other definitions and special rules

For purposes of this section— (1)

Employee and employer

(A)

Partners and partnerships

The term employee includes a partner and the term employer includes a partnership. (B)

Certain rules to apply

Rules similar to the rules of section 52 shall apply. (2)

Certain costs not included

Costs paid or incurred by an employer for food or health insurance shall not be taken into account under subsection (a). (3)

No credit where grant awarded

No credit shall be allowable under subsection (a) with respect to any qualified wellness program of any taxpayer (other than an eligible employer described in subsection (f)(2)(A)) who receives a grant provided by the United States, a State, or a political subdivision of a State for use in connection with such program. The Secretary shall prescribe rules providing for the waiver of this paragraph with respect to any grant which does not constitute a significant portion of the funding for the qualified wellness program. (4)

Credit period

(A)

In general

The term credit period means the period of 10 consecutive taxable years beginning with the taxable year in which the qualified wellness program is first certified under this section. (B)

Special rule for existing programs

In the case of an employer (or predecessor) which operates a wellness program for its employees on the date of the enactment of this section, subparagraph (A) shall be applied by substituting 3 consecutive taxable years for 10 consecutive taxable years. The Secretary shall prescribe rules under which this subsection shall not apply if an employer is required to make substantial modifications in the existing wellness program in order to qualify such program for certification as a qualified wellness program. (C)

Controlled groups

For purposes of this paragraph, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer. (f)

Portion of credit made refundable

(1)

In general

In the case of an eligible employer of an employee, the aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of— (A)the credit which would be allowed under this section without regard to this subsection and the limitation under section 38(c), or (B)the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 38(c) for any taxable year were increased by the amount of employer payroll taxes imposed on the taxpayer during the calendar year in which the taxable year begins.

The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of the credit otherwise allowable under subsection (a) without regard to section 38(c).

(2)

Eligible employer

For purposes of this subsection, the term eligible employer means an employer which is— (A)a State or political subdivision thereof, the District of Columbia, a possession of the United States, or an agency or instrumentality of any of the foregoing, or (B)any organization described in section 501(c) of the Internal Revenue Code of 1986 which is exempt from taxation under section 501(a) of such Code. (3)

Employer payroll taxes

For purposes of this subsection— (A)

In general

The term employer payroll taxes means the taxes imposed by— (i)section 3111(b), and (ii)sections 3211(a) and 3221(a) (determined at a rate equal to the rate under section 3111(b)). (B)

Special rule

A rule similar to the rule of section 24(d)(2)(C) shall apply for purposes of subparagraph (A). (g)

Termination

This section shall not apply to any amount paid or incurred after December 31, 2017.

(b)

Treatment as general business credit

Subsection (b) of section 38 of the Internal Revenue Code of 1986 (relating to general business credit) is amended by striking plus at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting , plus, and by adding at the end the following:

(32)the wellness program credit determined under section 45O.

(c)

Denial of double benefit

Section 280C of the Internal Revenue Code of 1986 (relating to certain expenses for which credits are allowable) is amended by adding at the end the following new subsection:

(f)

Wellness program credit

(1)

In general

No deduction shall be allowed for that portion of the costs paid or incurred for a qualified wellness program (within the meaning of section 45O) allowable as a deduction for the taxable year which is equal to the amount of the credit allowable for the taxable year under section 45O. (2)

Similar rule where taxpayer capitalizes rather than deducts expenses

If— (A)the amount of the credit determined for the taxable year under section 45O, exceeds (B)the amount allowable as a deduction for such taxable year for a qualified wellness program,

the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.

(3)

Controlled groups

In the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 41(f)(5)) or a trade or business which is treated as being under common control with other trades or business (within the meaning of section 41(f)(1)(B)), this subsection shall be applied under rules prescribed by the Secretary similar to the rules applicable under subparagraphs (A) and (B) of section 41(f)(1).

(d)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

Sec. 45O. Wellness program credit.

(e)

Effective Date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007. (f)

Outreach

(1)

In general

The Secretary of the Treasury, in conjunction with the Director of the Centers for Disease Control and members of the business community, shall institute an outreach program to inform businesses about the availability of the wellness program credit under section 45O of the Internal Revenue Code of 1986 as well as to educate businesses on how to develop programs according to recognized and promising practices and on how to measure the success of implemented programs. (2)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out the outreach program described in paragraph (1).