Departments - May/June 2011

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Lobbying Efforts for Employee Wellness Initiative Prove Encouraging

By Deborah L. Vence

For nearly two years, representatives of the Incentive Legislation Campaign Coalition have been lobbying members of Congress for a tax break that would encourage corporations to use employee wellness programs.

Today, there is hope that legislation will be proposed and passed in the near future.

"Our recent meeting (on Feb. 15) appears to have been something of a breakthrough for us. Our wellness incentive proposal had been favorably received by republicans and democrats alike, but we were unable to obtain the commitment of any senator to sponsor it. After our last meeting, it appears that we may have been able to obtain strong signals of support/sponsorship from two to four senators," said George B. Delta, executive director of the Incentive Federation Inc., a Falls Church, Va.-based umbrella organization that was founded to promote, protect and research the incentive field, encompassing recognition, promotional products and related promotions.

"This has not been introduced as legislation. We've met with most members of [the Senate] finance committee, both republicans and democrats. We're trying to get a revenue score—the amount of revenue that it's going to bring in," he said.

Delta explained that getting legislation sponsored and introduced would depend on the amount of tax revenue loss associated with the proposal and the availability of a larger bill to which the proposal can be attached.

"The larger bill would probably end up being a tax bill, although there may be some flexibility. After our Feb. 15, 2011, meeting, we believe we have gone from general indications of support to more specific ones, as long as the revenue loss from our proposal is not prohibitively large," Delta added. "In summary, it looks like some members have come around from support in principle to a belief that our wellness incentive proposal may well be a relatively inexpensive way of reducing health care costs, providing a tool to private businesses to experiment with ways of helping their work force become healthier and more productive, and creating a targeted incentive that is not mandated by the government."

The Incentive Federation began its legislative initiative to raise the profile (arguably to create a profile) of the incentive, rewards and recognition marketplace, and to seek the enactment of a tax-advantaged wellness award in the fall of 2009, Delta said.

"Our initial meeting on Capitol Hill was Oct. 20, 2009, in the form of an incentive symposium. Since that initial symposium and meeting with members of Congress, members of the incentive industry have come to Washington, D.C., to meet with members and their staffs four times," he said. "The last such meeting was on Feb. 15, 2011. Our legislative counsel, James F. Miller of the law firm of DLA Piper, and I also meet with congressional staffs between the trips to DC to try to move our proposal along."

Among the qualifications in employee wellness programs, the awards have to be no more than $400 per employee and they have to be tangible personal property. Additionally, employee wellness programs can include screening programs or even a full-scale comprehensive wellness program, including smoking cessation programs, a weight-loss program, on-site fitness center, health and lifestyle coaching, and stress management strategies.

"Even with the Patient Protection and Affordable Care Act, which is [President] Obama's PPACA, it enshrines universal coverage, and it doesn't do much to address cost. Wellness [programs] reduce health care costs and [help] motivate employees. If Congress authorized employers to give incentives, noncash, merchandise incentives—nontaxable, tangible merchandise, that would or could create an incentive and opportunity for companies to reduce health care costs," Delta said.

And, the fact is that employees are more inclined to participate in wellness initiatives when an incentive is offered. Studies prove it.

Proof is positive: Delta recalled a study conducted by MED-STAT, an Ann Arbor, Mich.-based health information company, for consumer products giant Johnson & Johnson that indicated only 26 percent participation by employees. When non-cash incentives were introduced, participation by employees jumped to 90 percent.

In addition, a white paper on corporate wellness programs submitted by Design Incentives Inc., a company that specializes in designing customized programs that help promote products or services, build brands, increase sales, or reward and retain employees and loyal customers, indicated that employee morale does measurably improve in 56 percent of the companies that offer wellness programs. The paper also stated that companies with effective health management programs can expect to: generate 20 percent more revenue per employee; improve market value by 16 percent; deliver 57 percent more in shareholder returns. (The source of the data is Staying @ work report: Building an Effective Health and Productivity Framework, Watson Wyatt, 2007.)

"We've been at this a year and a half, almost two years. Things are much better. We've found that it has strong bipartisan support. This has been well received. We've found some liberal democrats and conservative republicans who find this equally wonderful," Delta added. "In other ways, we're trying to not just get it enacted, but also just trying to raise our profile. So, we've raised awareness. We've made progress a great deal."

Learn More!

To find out more details about how tax laws and other legislation is affecting incentives and rewards, click to A Taxing Situation for a full-length feature on the topic.