May 1, 2013 - 2:33pm
Employers generally would not be allowed to include health care plan premium contribution discounts they offer employees who participate in wellness programs to determine if the coverage passes a health care reform law affordability test, under newly proposed Internal Revenue Service regulations.
The eagerly awaited regulations, released Tuesday, deal with one of the last major employer-related areas, for which there has been no guidance in how to comply with the Patient Protection and Affordable Care Act.
The regulation involves the relationship between a health care plan premium affordability test, slated under the reform law to go into effect in 2014, and premium discounts employers offer employees to give them a financial incentive to participate in their wellness programs.
Under that test, coverage is considered affordable, as long as the premium paid by an employee for individual coverage does not exceed 9.5% of wages or household income. If the premium contribution exceeds that threshold, the coverage is considered “unaffordable” subjecting the employer to a $3,000 penalty.
Until now, it wasn't clear whether premium discounts some employers provide for wellness program participation would be included or excluded when running the affordability test.
One exception
Now, the IRS said premium discounts would be excluded in running the affordability test, with the exception of tobacco cessation programs.
For example, if an employee charged employees a monthly premium of $100 for single coverage if they participated in a wellness program and $120 for those that did not, employers would use the $120 premium assessment in testing whether the coverage was affordable.
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