Senate lawmakers are considering tax credits for sponsors offering employee wellness programs, in part to deter employers from curbing health benefits in a post-reform environment.

Currently House and Senate leaders are furiously working on a handful of bills in hopes of finding viable measures that can garner enough votes for approval. Key sticking points remain the cost of reform – in the area of $1 trillion – and the possibility of a government-run public health plan option. Some key Democrats are pushing hard for a government plan to keep private insurers honest, but others favor a more moderate approach such as purchasing cooperatives operated by members.

Some analysts predict a government-run plan would prompt employers to cut health insurance programs, even if it meant they would have to pay a fee for not playing. That’s why members of the Senate Finance Committee inserted a provision designed to hold the line on employer investments in wellness programs.

Under current tax code, costs for an employer-provided wellness program for employees are deductible by the sponsor as a business expense. Under the proposed option, a tax credit would be allowed for 50% of the costs paid by an employer for providing a “qualified wellness program” during a taxable year. The amount of the credit would be limited to an amount not exceeding $200 for each employee not exceeding 200 employees, plus $100 for each additional employee in excess of 200 employees.

Only employees generally working more than 25 hours per week are taken into account. For purposes of the credit, any amount paid for food or health insurance could not be included as a cost of the wellness program. The credit would not be refundable and would not be paid in advance and would be available for a maximum of five years.

To claim the tax credit for eligible expenditures, an employer would be required to obtain a certification by the Secretary of Health and Human Services, in coordination with the Director of the Centers for Disease Control and Prevention, and the Secretary of the Treasury, that its program meets the definition of a qualified wellness program. Reports indicate that Senators would also like to give CDC money to serve as a resource for employers, to help them create and standardize wellness programs.

In order for a program to be a qualified wellness program under the proposal, all employees would be required to be eligible to participate in the program. Further, under the proposal, a qualified wellness program includes four components: health awareness (such as health education, preventive screenings and health risk assessment); employee engagement (such as mechanisms to encourage employee participation); behavioral change (elements proven to help alter unhealthy lifestyles such as counseling, seminars, on-line programs, self help materials); and a supportive environment (such as creating on-site polices that encourage healthy lifestyles, eating, physical activity and mental health).

For an employer with 500 or more employees, to be a qualified wellness program, a program would be required to include all four components. For an employer with less than 500 employees, to be a qualified wellness program, a program would only be required to include at least three of the four components. In addition, to be a qualified wellness program under the proposal, the program would be required to be consistent with evidence-based research and best practices, as determine by the Secretary, such as research and practices described in the Guide to Community Preventive Services and Guide to Clinical Preventive Services and the National Registry for Effective Programs.

Options such as the wellness tax credits could emerge as important bargaining points as lawmakers continue to seek compromises and agreement on an omnibus package they might send to President Obama this fall.