Tax Issues Intentionally Not Addressed In Wellness Regulations, IRS Speaker Says
By Florence Olsen
Recently issued rules on wellness programs under the Affordable Care Act did not address the tax treatment of wellness incentives because that was not the purpose of the regulations, an Internal Revenue Service official said May 31.
“Unfortunately, there’s been some confusion,” said Stephen B. Tackney, IRS deputy division counsel and deputy associate chief counsel in the Tax Exempt and Government Entities Division. The wellness program regulations are not about tax consequences or tax compliance, he said.
“If you comply with the regulations, it doesn’t affect your tax treatment,” Tackney said during a session on health care and the Affordable Care Act at the Federal Bar Association’s annual Insurance Tax Seminar.
Asked to clarify whether “incentive rewards” offered through wellness programs could be considered benefit payments, Tackney said that cash paid to employees to cover a portion of their gym fees, for example, is not medical care, which means that it would not qualify for special tax treatment as a group health plan benefit.
In that case, “you look to your regular tax principles,” Tackney said.
“If you are providing your employee cash for doing something, generally that’s going to be taxable,” unless it is somehow excludable “as a fringe benefit or something like that,” he said.