On April 30, 2013, the Internal Revenue Service released a notice of proposed rulemaking intended to answer some of the questions that remained open in the wake of May 2012 final regulations implementing the premium tax credit program.
The proposal addresses the question left open by the HHS regulations as to how reduced cost sharing under wellness programs should be treated in calculating whether a plan passes minimum value rules. Recognizing that “certain individuals inevitably will face barriers to participation [in wellness programs] and fail to qualify for rewards,” the proposal does not consider reduced cost-sharing in wellness programs as counting toward plan minimum value with one exception: Minimum value may be calculated assuming that every individual satisfies the terms of a nondiscriminatory program aimed at the prevention or reduction of tobacco use.
This is not what wellness proponents wanted to see. This means that the cash incentives employers provide to employees for participation in wellness programs will not count toward the mandate to provide a plan costing no more than 9.5% of an employee's W-2 wages.
This, however, will be a non-story in California if law makers get their way and continue moving Senate Bill 189 (Monning) through the legislature. This bill would prohibit wellness program incentives linked to premiums or cost sharing. I.e., it would legally remove all teeth from a wellness plan. 