Relates to providing a tax credit to businesses for qualified expenses relating to occupational wellness

Summary of provisions

Section 1-- Details the legislative findings and intent relative to the value and benefit of occupational wellness programs to the overall health and well-being of individual employees and to the associated business or corporate enterprise offering such programs.

Section 2-- Details the application process, criteria and requirements pertaining to the prospective agreement between the Department of Health (hereinafter, the Department) and an applicant for an occupational wellness tax credit. Among other provisions, this section provides that the applicant applying for credit submit a detailed application to the Department, outlining the occupational wellness plan to be implemented including information relative to goals, costs, and expected results and benefits of the program. Requirements pertaining to the agreement for a tax credit between the Commissioner of the Department and the applicant are enumerated, including a maintenance of plan clause, a detailed reporting mechanism, a non-compliance with agreement clause, and limitation of the credit application to "qualified employees." This section further provides that the Commissioner of the Department award tax credits on a competitive basis, in writing, within. 45 days of receiving an application. Requirements for application approval are provided, including a priority to small businesses in the amount of $10 Million in dedicated funding, a preference for "new programs," weighing the strength of the application and ensuring geographical diversity.

Section 3-- Amends Section 210 of the tax law by adding a new subdivision 22a, that establishes the occupational wellness tax credit. This section formally allows "taxpayers" a tax credit for providing an occupational wellness program to their employees. This section spells out the range of activities that fall under the definition of an occupational wellness program, that will qualify for the tax credit associated thereto. Specifically, this section provides that the Department shall determine the relevant components of an occupational wellness program, including, but not limited to provision of health and lifestyle education and information, conduction of health screenings and clinical testing, encouragement of fitness enhancement opportunities, and provision of a formal Employee Assistance Program. This section further provides that the amount of credit to be allowed to a singular "taxpayer" for a given year shall not exceed two hundred dollars per employee, capped at an absolute maximum of ten thousand dollars per employer. The amount of credit issued to all "taxpayers" under this subdivision shall not exceed twenty million dollars annually.

Section 4-- Amends section 606 of the tax law by adding a new subsection (numbered hh) that will compute the amount of the occupational wellness tax credit, under subdivision 22-a of Section 210 of the tax law.

Section 5-- Establishes the same exact provisions in Section 606 of the tax law as provided for in Section 3 of the instant bill, amending Section 210 of the tax law. For more elucidation, see Section 3 above,

Section 6-- Clarifies that in addition to state funds appropriated for Program purposes under this act, the Commissioner of the Department may accept grants from public or private sources to further the ends of the occupational wellness tax credit program. Allows the Commissioner of the Department to contract with independent organizations relative to the development of criteria for occupational wellness programs.

Section 7-- Requires the Commissioner of the Department to submit an annual report, concerning the occupational wellness program, to the Governor, Temporary President of the Senate and the Speaker of the Assembly.

Section 8-- Establishes the effective date of this act and provides a five year sunset provision.

Justification

Spiraling health care costs are a penultimate issue facing our state. Employers continually worry as the cost of providing health care increases to unprecedented levels. Chronic diseases, many of which can be ameliorated, if not prevented, by diet and exercise, result in disability and premature death. The average per capita spending on health care increased 99% between 1990 and 2002. In 2001, premiums for employer-sponsored health insurance increased by 11.0%. For reasons related to the fiscal, as well as physical well-being of New York State, the legislature must take an interest in and play an active role in keeping its workforce healthy.

Almost every American is adversely affected by chronic disease in one way or another--through the death of a loved one; a family member's struggle with lifelong illness, disability, or compromised quality of life; or the huge personal and societal financial toll wrought by chronic disease. More than 1.7 million Americans die of a chronic disease each year. The five chronic diseases are heart disease, stroke, diabetes, cancer, and chronic pulmonary diseases such as asthma, bronchitis and emphysema. One million Americans can no longer perform daily tasks, such as walking or bathing, without help due to a stroke. Expenditures for health care have continued to rise. Much of these costs can be attributed to the diagnosis and treatment of chronic diseases and conditions such as diabetes, obesity; cardiovascular disease and asthma. Although chronic diseases are among the most common and costly of all health problems, they are also among the most preventable. Many of the disease conditions responsible for skyrocketing expenditures can be traced back to modifiable risk factors. Individual behavior and lifestyle choices influence the development and course of these chronic conditions. Unhealthy behaviors, such as poor diet, lack of physical activity, and tobacco and alcohol use are risk factors for many chronic conditions. For example, overweight and obesity are risk factors for type 2 diabetes,

congestive heart failure, stroke, and hypertension. Encouraging individuals to adopt healthy habits and have health screenings may reduce the burden of chronic disease. Society and employers are increasingly designing programs to promote healthy behaviors. Companies are increasingly spending enormous amounts of money on health care and productivity when you start adding up the medical dollars, absenteeism, disability, workers compensation, and safety issues. Large employers such as Johnson & Johnson {J & J) and DuPont Corporation, among others, have reported the effectiveness of their occupational health promotion programs. Human capital is an employer's greatest investment toward business success. An occupational wellness program benefits employers by improving morale, reducing turnover, reducing absenteeism due to illness and injury, and decrease health insurance costs. J & J calculated a $225 per employee, per year savings in health care expenditures due to lower utilization of health care services. Furthermore, J J saw results within three years. Other big companies such as Citibank, Steelcase Corporation of Michigan, United Airlines, Travelers Corporation, Motorola and DuPont all reported returns of $1.42-$16 for every dollar spent on employee wellness programs.

When companies promote wellness and healthy living to their employees, they can save on health care costs and reduce absenteeism. Studies demonstrate that the health of employees impacts a business's bottom line by helping companies reduce health care costs an average of $3.72 for each dollar invested. In addition, companies average $5.06 in reduced absenteeism fox each dollar invested in a wellness program. These programs save companies money, boost productivity, and motivate employees.

A healthy employee with few health risks spends less money on medical care due to fewer chronic illnesses and avoidance of serious health incidents. On the other hand, poor health leads to symptoms and clinical outcomes that lower functionality and increase the need for expensive medical care. Absences from work leads to lost productivity, whereas healthy workers get the job done better, faster, and cheaper. Therefore, healthy employees not only cost less in medical care, they also are more functional at work, absent less often, experience fewer injuries, and return to work more quickly after illness or injury.

This bill would encourage employers to create occupational work and wellness programs by allowing tax credits for establishing such programs. A model program would include formal training as a component of job related instruction which provides information on subjects relating to personal and family health, assess employee health levels, encourages opportunities for employees' fitness-related activities, and provides incentives for employees who regularly engage in physical activity.

Despite the evidence that prevention works, the focus in our health care system over the past century has not been on prevention of chronic disease, but on treatment of short-term, acute health problems. As a nation, we have emphasized expensive cures for disease rather than cost effective prevention.

With an employer-based health program that embraces prevention and healthy behavior, we can become a healthier nation. Evidence indicates

that with education and social support, people can and will take charge of their health. The state must therefore support initiatives that focus on individual responsibility and behavior change related to health.

If we are serious about improving the health and quality of life of Americans, while lowering health care costs in the long term, we cannot afford to ignore the power of prevention.

Legislative history

Senate 3835 of 2005-2006; Referred to Committee. Senate 2595 of 2007-2008; referred to Investigations and Government Operations Senate 4154 of 2011-2012; referred to Investigations and Government Operations

Fiscal implications

Short-term, to be determined; Long-term, beneficial savings to the State.

Local fiscal implications

None specifically noted, at present.

Effective date

Immediately.