Will this affect our current HSA or FSA (which has a max contribution of $2500.00)? This will have NO effect on any of these plans. ACL Wellness is a section 125 medical plan which stands separate from what is already in place.

We currently have a cafeteria plan and have pre tax deductions for Health Insurance and Wellness programs. How and why is this not a conflict? You can have multiple programs set up under a Section 125 plan. The current Wellness plan you have is most likely not a section 125 medical plan which means that your program can be ran through a 125 but it still will cost the client, your employee, for the benefits. Our plan provides a medical reimbursement for participation which in turn creates benefits with NO Reduction in take home pay.

Why is there an $800.00 to $1000.00 reduction in taxable income for participation in this new Wellness program? Most existing plans that are 125 Cafeteria Plans only offer a dollar for dollar reduction? The cost for this Wellness plan is a deduction in salary. Our plan then uses a section 105 medical reimbursement of the exact cost of the plan minus the $40 dollars the Employee pays. Participation must be met to stay on the plan by complying with one trigger monthly.

Are there specific guidelines used to justify that deduction? ACL Wellness uses industry standard guidelines in pricing the Wellness plan. The amount ACL charges for Wellness is discretionary.

What is the primary difference between a Participatory and a Non-Participatory Wellness plan? Participatory plans are non-discriminatory and must show continuous participation to receive benefits. Results based plans offer rewards for certain behavior. I.E. A plan can be specific to only smokers of the employer. If the employee takes action in effort to try to quit smoking, the employee will receive a small reward. If the employee successfully quits, he will receive another small reward. After all the results have been met, ongoing participation will cease with this type of plan. Rewards or incentives for these type of plans can be taxed as income if the rewards exceeds the allowed amount.