Senators Introduce Tax Incentive for Employer-Sponsored Wellness Programs

July 10, 2007 ( - Two U.S. Senators have introduced a measure that would nudge employers to implement wellness programs by giving them tax incentives.

According to a press release about The Health Workforce Act, the legislation is sponsored by Senator Tom Harkin, (D-Iowa), and Senator Gordon Smith, (R-Oregon). It would provide tax incentives to businesses, particularly small- and medium-sized employers, that help their employees lead healthier lives and prevent chronic illnesses.

The measure would provide a tax credit of up to $200 per employee for the first 200 employees and up to $100 per employee after that to businesses that offer comprehensive wellness programs.

Among other things, the legislation is meant to combat rising expenses suffered by employers indirectly as a result of illness-induced employee absences, with obesity alone costing employers approximately $33 billion in health care and other indirect costs, according to the press release.

Types of employee wellness programs eligible for the tax credit must include three of the following four provisions: 

  • Health awareness programs that include education and health risk assessment programs;
  • Behavioral change programs that encourage employees to lead a healthy lifestyle through counseling, seminars or online programs, including classes on nutrition, stress management, or smoking cessation;
  • A supportive environment to encourage employee participation in the workplace wellness programs, which could include offering a meaningful incentive to participating employees, such as a reduction in health insurance premiums;
  • An employee engagement committee, which would tailor the wellness program to the needs of the workforce.

An employer can receive the tax credit for 10 years after establishing qualified wellness programs.

“Preventing these chronic diseases and unhealthy lifestyles not only helps individuals live longer and more fulfilling lives, it saves money,” said Harkin, in the press release. “For example, proactive treatment of hypertension costs about $1,000 per year whereas treatment for a heart attack – which hypertension is often a cause of – costs a minimum of $50,000, not including time off and loss of productivity. It simply makes sense to partner with employers and leverage the place where Americans spend the majority of their waking hours – the workplace.”