Perks to encourage employees to lose weight, stop smoking or otherwise improve their health have surged in popularity in recent years.

But a quirk in state law prevents insurers from offering such incentives to small businesses or individuals.

A bill working its way through the state legislature aims to change that. House Bill 1012, sponsored by Rep. Joe Rice, D-Littleton, and Rep. Amy Stephens, R-Colorado Springs, allows insurers to provide premium discounts or rebates as well as reduced co-payments and deductibles to businesses with fewer than 50 employees or individuals for their participation in wellness programs.

The legislation also will potentially benefit employees of small businesses who, like all workers, are increasingly shouldering a larger part of their health care costs, said Jim Sugden, legislative co-chairman of the Colorado State Association of Health Underwriters. Wellness programs typically encompass such initiatives as stress management programs, health screenings, nurse- on-call programs and discounts to fitness centers.

"It will be especially helpful to businesses that have taken consumer-driven health plans with higher deductibles," he said. "People in those plans are more aware of the cost of care and are more likely to take proactive measures to make themselves a little healthier."

Insurers have been able to offer wellness incentive programs to large and midsize companies for years because they're regulated by federal law. State law governs what factors insurers can use to determine rates for small groups, and wellness programs aren't allowed.

Obesity and smoking are two of the largest drivers of health care costs because they are contributing factors to conditions such as diabetes and heart disease. For every $1 invested in health promotion, a company can save from $3 to $5 of costs by reducing medical expenses, absenteeism and workplace accidents, according to the Small Business Wellness Initiative.

National Jewish Health last year launched FitLogix, a weight management program. It quickly found that participants needed incentives - no matter how minor - to stick with their weight-loss efforts, said Dr. David Tinkelman, vice president of health initiatives at National Jewish.

"People just like getting recognition for their efforts," he said.

The majority of patients participating in the FitLogix program during a 10-month period lost 5.9 percent of their weight, which is "clinically relevant," Tinkelman said. The group saved more than $6.5 million in medical claims from the $28.9 million spent in the year-earlier period.

The bill passed the House and will be considered Thursday by the Senate Health and Human Services Committee. The Senate sponsors are Sen. Shawn Mitchell, R-Broomfield, and Sen. Linda Newell, D-Littleton.