On Monday August 6th, Governor Deval Patrick signed into Massachusetts law a health care cost cutting bill (Senate Bill No. 2400) which includes a tax credit for businesses that implement wellness programs. The credit is equal to 25% of the costs associated with implementing the wellness program, with a maximum credit of $10,000 per business in any fiscal year. The wellness program tax credits cannot reduce the tax a business owes below zero in a given year, but may be carried forward for an additional five taxable years. The tax credit provision is effective January 1, 2013, and the Department of Public Health has been given the responsibility to issue regulations that provide the eligibility criteria to receive the credit.
Wellness programs are used by employers to promote a healthy workforce which in turn can reduce costs, enhance productivity and promote better employee-company relations. The new tax credit is further inducement for employers to consider instituting a wellness program. However, employers must ensure that the program design does not run afoul of laws designed to protect against breaches of privacy and unlawful discrimination (such as the Health Insurance Portability and Accountability Act, the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act). Employers are therefore encouraged to consider instituting a wellness program, but are cautioned to consult with counsel prior to implementation.