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Toole Guard: The Tax Value of a Wellness Program

The MA Wellness Tax Credit, adopted in 2013, encourages employers to implement a workplace wellness program with the belief that future health care costs will be reduced if employees take pro-active care of themselves.

This credit provides MA small businesses (under 200 employees) with a tax credit of 25% of the approved costs associated with implementing a certified wellness program ($10,000 maximum per year).

The application for this credit just became available this month! Following is information to help you determine if your business can take advantage of this 25% tax break.

Which Businesses are Eligible for this Credit?
A business must meet the following criteria to be eligible to have their wellness program certified with the seal of approval from the MA Department of Public Health:

  • Organized as a sole proprietorship, partnership, or corporation
  • Engaged in business in the Commonwealth
  • Subject to taxation under chapters 62 or 63 of the Massachusetts General Laws
  • Have 200 or fewer employees
  • Majority of employees work in MA

What Qualifies as a Wellness Program?

Before a business is able to reflect the credit on their tax filing, they must have their wellness program certified and receive a seal of approval from the MA Department of Public Health.

To achieve this, following are some criteria that the business must meet. A complete listing is found in the regulation.

  • Offer health benefits to employees
  • Not have been cited by OSHA within the past 5 years for willful or repeat health or safety violations
  • Have a designated ‘wellness champion’ that is responsible for developing and implementing the wellness program
  • Formally communicate to all employees about the wellness program
  • Provide a work environment that supports physical and mental health and well being
  • Collect data/information on employee interests on various health topics
  • Utilize a Health Risk Assessment to identify the most important specific needs and health risks of all employees.
  • Provide health information that addresses the specific needs of employees through educational programs
  • Offer behavioral change programs offered to support employees seeking to change his/her lifestyle (i.e. weight control programs, tobacco cessation program, lifestyle coaching, etc.)
  • Have documentation that at least 33% of employees participate in at least one element of the wellness program

Note that employee participation in an employer’s program is voluntary with all information gathered held confidential.

For strategies and additional resources: Wellness Program Model

What Costs are Eligible for the Credit?
Following are some approved costs that would be used to calculate the 25% tax credit amount:

  • Portion of the salary of the person(s) responsible for planning, participating on the wellness committees, managing and/or implementing the program.
  • Awareness and education programs (i.e. seminars, newsletters, print material, etc.)
  • Third party relating to:
  • health risk assessments of employees
  • training, education, or behavioral intervention that addresses the employee health needs
  • Behavior change program not provided by health plans (i.e. pedometers, material, online tools, health coaching, gym memberships, etc.)
  • Changes of the worksite that encourage healthy lifestyle choices (i.e. improvement to stairs, educational material for healthy food choices in vending machines, break room improvements (dishwasher/microwave), AED installation, tobacco free signage, meeting space, etc.)
  • Employee incentives for participation in wellness activities (i.e. gift cards, days off, health plan savings accounts, cash, etc.)
  • Paid work time for health screenings, check-ups, appointments for managing chronic conditions.
  • Associated with injury prevention (i.e. safety subscriptions, equipment, and signage, etc.)
  • Safety training (i.e. repetitive motion, safe lifting, etc.)
  • Data collection (i.e. needs and interest survey, health risk assessment, etc.)
  • Associated with evaluation of program (i.e. productivity, participation rate, employees satisfaction, etc.)

A complete listing can be found in the regulation.

What is Involved with Applying for the Credit?
The deadline to file the 2013 application with the Department of Public Health for the credit is 12/31/13. However, there is a $15,000,000 cap on funds available for the credit for all businesses. If the funds are exhausted for the calendar year when your application is received, you would need to wait and re-apply the following year. The Commissioner can give preference to businesses with 100 employees or fewer.

Note that certification is good for only one taxable year and your business would need to re-apply annually for the credit.

The application must be completed on-line.

For complete details, please refer to the April 2013 Final Regulation.