Thousands of North Dakota's public employees will see one of their health benefits put on hold Jan. 1 while officials figure out how to respond to a new IRS memo.
The move affects a monthly incentive that amounts to up to $250 per year for more than 3,600 health contracts for employees and retirees in Grand Forks County - including large employers such as UND, the city of Grand Forks and the State Mill. The money is awarded to certain employees who log attendance at local gyms or log health-conscious tasks online.
Sparb Collins, executive director of the state's Public Employees Retirement System, said the program encourages healthy behaviors that help cut down on health care costs.
The IRS recently said such monetary incentives are taxable income-a move that creates an unforeseen financial headache for both employees and the employers who disburse it.
As a result, Collins said the retirement system's leadership decided in October to suspend the benefit-which is available to contract-holders and their spouses-effective Jan. 1 to explore exactly how to move forward. A contract-holder and their spouse can get up to $500 total a year if they both meet the criteria.
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"We want to make sure that it's something that will continue to work for our members and our employers," Collins said, adding that leaders will reach a decision before the end of June.
Tangee Bouvette, compensation and benefits administrator for Grand Forks, said juggling the tax matters aren't a very big deal from an administrative standpoint.
"Administratively, it's not a huge deal for us," she said. "I think some (employees) will feel like it's a big deal, that it's taxed."
Peter Johnson, a spokesman for UND, said the university will continue to follow the issue.
"What we need to do as an institution is wait and see what the (retirement system leadership) does," he said.
