Climbing the Hill

Nothing has moved fast in the 112th Congress. Getting a tax credit for wellness incentives passed requires a long-term view and a great deal of patience.

• By Jerry Laws
• Jun 01, 2011

In case you haven't noticed, the pace of enacting bills into law has all but stopped during the 112th Congress that began in January 2011. While a do-little, divided Congress pleases many, something must be passed -- a tax bill, specifically -- for George Delta, executive director of the Incentive Federation, and its allies to succeed on Capitol Hill. They want to have a tax credit enacted that encourages the use of wellness incentives.

A perfect vehicle to carry their provision has been introduced several times, but it always died short of passage. The Healthy Workforce Act, championed by U.S. Sen. Tom Harkin, D-Iowa and chairman of the Health, Education, Labor and Pensions Committee, and other members of Congress, would establish a tax credit for businesses that offer "effective and comprehensive" wellness programs. "It would've given a tax credit to employers for running wellness programs. What was missing was something that would motivate and incentivize employees," Delta said.

The thinking behind the Incentive Legislation Campaign is that a new Internal Revenue Code section 274(p) for wellness incentives, along the lines of an existing 274(j) tax credit for employers' safety and service awards, would suffice. When awarded to an employee, such a tangible wellness incentive would be tax free to that employee and represent a tax credit for the employer. This was recommended initially as an add-on but now stands on its own, he explained.

Delta and other representatives of federation member companies began visiting Capitol Hill to make their case in October 2009. They made three trips in 2010 and one more in February 2011. Working with the staffs of tax and health care committees, they were making good progress in summer and fall 2010, only to see animosity rise between Democrats and Republicans as the November 2010 midterm elections neared. Their opportunity disappeared.

But as the calendar turned to 2011, they found a lot of support, he said. Staffers wanted to know how many people the legislation would help, how much money would employers spend because of it, and how much merchandise employers would hand out. The scenario was that those estimates would be provided, and then a request would be made for a revenue score from the Joint Tax Committee on how much lost revenue in tax collections the credit would represent.

Delta said March 31 that he expected the revenue score to come soon. After that, the next step is securing co-sponsors for the legislation. He said he could not hazard a guess about what the revenue score might be but added, "I can't imagine that this would be a huge number." He said the Congressional Budget Office's estimate of lost revenue for the Healthy Workforce Act was about $1 billion over 10 years, much higher than the wellness incentive credit will be scored. The revenue score for the current 274(j) tax credit was less than $500 million over five years, Delta recalled.

'You Do Have to Have a Longer Horizon'
Meanwhile, he expects to lead one or two more delegations to Capitol Hill probably this year. "It depends on how other legislation is moving and how quickly a tax bill might surface," Delta said.

Nothing has moved fast in this Congress. Getting the credit passed to aid the $46 billion incentives industry requires a long-term view and a great deal of patience.

"What we heard from Senator Harkin's staff was, essentially, 'We have been introducing a version of our Healthy Workforce Act since 2003.' And so you do have to have a longer horizon," Delta said. "This is part of a process of education, re-education, and then perhaps finding the right opportunity. We view this wellness initiative as part of a longer-term strategy of keeping the Incentive Federation and the incentives industry in front of Congress. If nothing else, we would like them to know that we are a positive force in the American marketplace. We're not the trinkets-and-trash folks. We're not a boondoggle. And we want them to understand that, even if they're not able to give us an additional wellness tool this year, if something that's harmful to the interests of the incentive marketplace comes before them, they'll at least know that there is an incentive marketplace, and we're not just trinkets and trash, and we don't want to do things that are harmful or useless. That we are a tool in the arsenal."

"We're a big marketplace and we're beneficial. That should resonate with those who like business, and that should resonate with those who like labor because it's a benefit to both sides," he continued.

The Incentive Federation was created in 1984 as a legislative organization for the incentive industry. It lobbies and supports research and education by the Incentive Performance Center (www.incentivecentral.org/) and the Forum (www.businessresultsthroughpeople.org/) in Evanston, Ill. Incentive organizations that are active members of the federation include the Incentive Marketing Association, the Promotional Products Association International (www.ppai.org), Recognition Professionals International (www.recognition.org), the Incentive Research Foundation (www.theirf.org), and the SITE International Foundation (www.siteglobal.com).

"We intend to continue our efforts this year, next year, the following year -- for as long as we continue to be able to raise funds for this," Delta said. Because we believe that having Congress recognize the importance of the incentives marketplace is a big deal. Wellness is an important issue for us, but the greater issue for us is to just make sure that we are known . . . to make sure that there isn't some accidental legislation that harms our interest because no one knows that we exist."

Staying before Congress is critical. "We're never going to abandon it because we think it's a useful project," he said. "But there are also other projects, perhaps expanding the scope of 274(j), maybe expanding the deduction for corporate gifts, which has been at $25 since 1962 when it was first enacted.

"The deductible portion of a corporate gift hasn't changed in 48 years, in other words. Four hundred dollars is still meaningful, but it would be nice to acknowledge reality and perhaps index 274(j) to inflation. Perhaps expanding the corporate gift deduction would be something we can talk about with Congress."

Sometimes congressional staffs and members of Congress ask why employers need a tax credit to bolster their wellness efforts. Given high health care costs and concerns about obesity, they ask, wouldn't companies encourage wellness even without a tax benefit for doing so?

On those occasions, Delta cites a study that showed worker participation in a large employer's wellness program jumped from 20 percent to about 90 percent after an incentive was introduced. "We get that question a fair amount. The answer's no," Delta said. "The truth is, incentives really do motivate employees to participate and employers to offer wellness programs."

The Healthy Workforce Act
Introduced several times in various forms, this bill would provide a tax credit to companies offering "effective and comprehensive wellness programs." It was numbered H.R. 1897 and S. 803 during the 111th Congress.

The bill would amend the Internal Revenue Code to provide a credit for 50 percent of the costs employers incur in implementing wellness programs for their employees. The bill was introduced in 2009 by U.S. Sens. Harkin and John Cornyn, R-Texas, and by U.S. Reps. Earl Blumenauer, D-Ore., and Mary Bono Mack, R-Calif.

This article originally appeared in the June 2011 issue of Occupational Health & Safety.