Tax Incentives For Employee Wellness Programs

Simpler is always better.

Tax incentives for employee wellness programs.

Wellness program incentives help employees adopt and maintain healthy behaviors for the rest of their lives. In most cases unless motivated most employees will have a hard time making healthy lifestyle changes. All incentives offered through a wellness program should be reviewed for tax purposes. A wellness program is a workplace program intended to improve and promote health and fitness in which an employer typically offers premium discounts cash rewards gym memberships or other incentives to participate.

People also ask these wellness questions. This is where incentives can help. The irs recently issued a chief council advice cca tax memorandum that addressed confusion over the taxation of incentives for participating in worksite wellness programs. Not only is it useful for attracting top talent but healthier employees inevitably lead to lower medical claims costs which leads to lower medical premiums which leads to a better profit margin.

Law and analysis section 61 a 1 of the internal revenue code and 1 61 21 a 3 of the income tax. It seems like a question that s not worth asking. The benefits of workplace wellness programs are endless. To boost engagement most employers offer some sort of incentive to employees for participation.

Wellness program incentives best practices. States including massachusetts indiana and mississippi have considered or implemented tax credits to incentivize small businesses to provide employee wellness programs. Wellness programs can be tax free to an employee. Achieving behavior change with wellness incentives.

Incentives are generally subject to tax unless 1 given as a premium credit 2 deposited into an fsa hsa hra or 3 are prizes of nominal value e g pens or t shirts. Wellness program incentives are a small part of wellness. For wellness programs that are not subject to the ada or gina see examples above an employer could still offer incentives penalties of 30 or more in some cases e g 50 for tobacco cessation programs that do not test for the presence of nicotine or unlimited amounts for programs that only require participation but not attainment of a. Employee wellness programs incentives.

Wellness program includes a reimbursement of all or a portion of the required employee contribution for the wellness plan that the employee made through salary reduction.