The IRS has released proposed regulations on the minimum value of eligible health care plans in terms of the health insurance premium tax credit, and the proposed rules could mean that many employers won’t be able to include their wellness programs within the minimum coverage requirements.
Under the proposed rules, only anti-smoking wellness programs would qualify for meeting the minimum coverage requirements that allow employers to avoid paying an excise tax penalty. According to Reuters, labor unions and consumer groups had pushed to limit the types of wellness programs that employers could claim helped them meet those minimum coverage requirements, arguing that such wellness programs can discriminate against unhealthy employees.
The IRS explained the decision about the minimum coverage in the proposed regulations. “Commentators offered differing opinions about how nondiscriminatory wellness program incentives that may affect an employee’s cost sharing should be taken into account for purposes of the MV calculation. Some commentators noted that the rules governing wellness incentives require that they be available to all similarly situated individuals. These commentators suggested that because eligible individuals have the opportunity to reduce their cost-sharing if they choose, a plan’s share of costs should be based on the costs paid by individuals who satisfy the terms of the wellness program. Other commentators expressed concern that, despite the safeguards of the regulations governing wellness incentives, certain individuals inevitably will face barriers to participation and fail to qualify for rewards. These commentators suggested that a plan’s share of costs should be determined without assuming that individuals would qualify for the reduced cost-sharing available under a wellness program.”
But there is an exception for wellness programs aimed at reducing tobacco use. “The proposed regulations provide that a plan’s share of costs for MV purposes is determined without regard to reduced cost-sharing available under a nondiscriminatory wellness program,” the proposed regulations continued. “However, for nondiscriminatory wellness programs designed to prevent or reduce tobacco use, MV may be calculated assuming that every eligible individual satisfies the terms of the program relating to prevention or reduction of tobacco use. This exception is consistent with other Affordable Care Act provisions (such as the ability to charge higher premiums based on tobacco use) reflecting a policy about individual responsibility regarding tobacco use.”