Offering robust employee benefits can greatly help companies that are looking to attract and retain top talent. In addition to offering traditional benefits like health insurance or retirement contributions, more employers are offering stipends to employees. These are additional funds an employer provides to cover specific employee expenses on a one-time basis or on a regular cadence. Stipends provide employees with extra financial support and demonstrate an organization's commitment to employee well-being and satisfaction.
In this article, we'll review several types of employee stipends, provide examples for each, and explain how you can offer them to your team.
1. Health stipends
You can offer a health stipend to cover your employees’ out-of-pocket medical expenses and health insurance premiums. You can offer funds up-front or reimburse employees for expenses already incurred. In some cases, a small business that can't afford traditional group health insurance may find that a health stipend is the best option to help employees pay for their own individual coverage.
However, you can’t require employees to submit receipts or invoices to prove they spent their stipend on any items included in IRS Publication 502. You also can’t ask employees for proof of health insurance coverage.
A health stipend can cover expenses related to:
- Monthly health insurance premiums
- Doctor's appointments
- Emergency care
- Over-the-counter (OTC) medicines
- Dental care
- Vision care
- Alternative therapies such as acupuncture or chiropractic care
Here are some companies that offer health stipends:
- Wattpad1 employees receive a $500 healthcare stipend for extra costs not covered by the company's insurance plan.
- Alliant Credit Union2 offers a $35 monthly stipend for health and fitness services and activities.
If you want a tax-free alternative to a health stipend that allows you to reimburse your employees for their medical costs, consider a health reimbursement arrangement (HRA). This IRS-approved benefit allows you to set a monthly allowance for your employees to use on items listed in IRS Publication 502, including individual health insurance policies. Your employees submit proof of their qualifying purchases, and you reimburse them up to their available allowance.
2. Wellness stipends
Employee well-being has become a top priority for companies looking to create a positive work environment. You can allocate a wellness stipend to support employees' physical and mental health. For instance, a health-conscious company might provide a wellness stipend for employees to join a local gym or participate in meditation or yoga classes.
A wellness stipend is an excellent addition to your benefits package to help employees with wellness expenses not covered by a health stipend or HRA.
A wellness stipend can cover expenses related to:
- Gym memberships
- Fitness classes
- Wellness apps and subscriptions
- Home exercise equipment
- Wearable devices
- Healthy meal kits
- Dietary Supplements
- Personal trainers
- Wellness retreats
- Mental health counseling
- Chiropractic care
- Recreational sports leagues
Here are some companies that offer wellness stipends:
- Calm3 offers its employees a $100 monthly wellness stipend to put toward their happiness and health.
- Basecamp4 offers its team members a fitness allowance of $100 a month. It also provides a monthly allowance of $100 for massages.
- Peloton5 offers a $500 annual reimbursement to all full-time team members for registration and sponsorship fees related to wellness events.
3. Remote work stipends
With the rise of remote work, many companies recognize the need to support employees in creating a productive home office environment. You can provide a remote work stipend to cover expenses related to work-from-home setups. For example, a company made up of virtual teams might provide a stipend for employees to create a comfortable and efficient workspace at home.
A remote work stipend can cover expenses related to:
- Office furniture, such as ergonomic desk chairs or standing desks
- Office supplies
- Upgrading technology
- Noise-canceling headphones
- High-speed internet costs
- Cell phone plans
- Utility bills
- Coworking space memberships
Here are some companies that offer remote work stipends:
- Calm offers its remote workers a $750 work-from-home budget to help create a more comfortable and productive home workspace.
- Zillow6 gives its remote employees a $450 one-time stipend for home office setup. The company also provides $150 monthly to cover remote work expenses.
- Almanac7 supports its remote teams with a $400 one-time stipend to cover equipment and home office expenses.
- Basecamp gives its remote workers a coworking space stipend allowance of $100 a month.
- Buffer8 provides remote employees with a one-time stipend of $500 to set up their home office space.
- PeopleKeep offers a monthly home internet access stipend to its fully remote workforce.
4. Commuter stipends
Commuting to work can be stressful and expensive for many employees. To alleviate this burden, some companies offer commuter stipends to help cover transportation costs. This gesture shows that you value their time and effort in getting to work. It can also contribute to increased employee satisfaction. For example, a company located in a major city might provide a monthly transportation stipend to help employees with their daily commuting expenses.
While you can offer tax-free transportation benefits of up to $300/month for transit and $300/month for parking, many expenses, such as bike expenses and gas, are ineligible from the IRS qualified transportation benefits program. A taxable stipend allows you to extend your commuter benefits beyond the IRS limits.
A commuter stipend can cover expenses related to:
- Public transportation passes
- Gas expenses
- Parking fees
- Mileage reimbursement
- Rideshare services like Uber or Lyft
Here are some companies that offer commuter benefits:
- Ribbon Health9 provides pre-tax commuter benefits for all employees, along with a complimentary bike-sharing membership with Citi Bike.
- Stellar Health10 offers free Citibike memberships for employees who bike to work.
5. Travel stipends
A travel stipend is a popular perk companies offer to encourage employees to explore new places or attend conferences and events. It can cover expenses such as airfare, accommodations, and transportation. For instance, a software development company might offer a travel stipend for employees attending industry conferences to stay updated on the latest trends and technologies.
A travel stipend can cover expenses related to:
- Plane, bus, or train tickets
- Hotel stays
- Baggage fees
- Passport fees
- Vacation/leisure activities
- Bike or scooter rentals
- Dining allowances
Here are some companies that offer travel stipends:
- AirBnB11 gives employees $2,000 a year to travel and stay in any Airbnb listing worldwide.
- FullContact12 employees receive $7,500 to go on vacation.
- Afar Media13 employees have unlimited vacation and an annual $2,000 travel stipend.
- Moz14 gives employees $3,000 annually for vacation expenses.
6. Technology stipends
In today's digital age, having access to the right technology is crucial for productivity and efficiency. You can provide a technology stipend to help employees acquire or upgrade their work-related devices and software. For example, a marketing agency with a remote workforce might offer a technology stipend to its designers to ensure they have the latest design software and hardware to create high-quality graphics.
A technology stipend can cover expenses related to:
- Software subscriptions
- Phone bills
- High-speed internet costs
Here are some companies that offer technology stipends:
- New team members at Summit CPA Group15 receive a $3,000 technology stipend.
- Buffer provides its employees with an annual technology stipend of $200.
- Appcues16 provides a $1,000 home office stipend and an additional $500 annual budget for additional work-related technology.
7. Education stipends
Encouraging continuous learning is crucial for employee growth. An education stipend enhances employees’ knowledge and demonstrates your commitment to their career development. For example, a marketing agency might provide an education stipend for employees to take digital marketing courses to enhance their skills and stay ahead in the industry.
An education stipend can cover expenses related to:
- Online courses
- Tuition fees for higher education programs
Here are some companies that offer education stipends:
- Chipotle17 offers certificates and full tuition coverage for specific programs. They also provide up to $5,250 in tuition assistance annually.
- Kaiser Permanente18 offers $3,000 for employee tuition reimbursement.
- Allstate19 employees can receive up to $5,250 in education reimbursements each year for courses related to an Allstate career path.
- Basecamp gives employees $1,000 a year for continuing education.
- Olark20 offers its workers $2,000 annually for continuing education.
8. Professional development stipends
In addition to education stipends, offering a professional development stipend allows employees to invest in activities that enhance their overall professional growth. For instance, a software development company might offer a professional development stipend to its engineers, allowing them to attend coding boot camps or purchase books and resources to stay up to date with the latest technologies.
A professional development stipend can cover expenses related to:
- Professional associations
- Online courses
- Books or audiobooks
- Educational assistance
- Student loan repayment programs
- Training costs
Here are some companies that offer professional development stipends:
- Buffer gives employees an annual stipend of $850 for conferences, courses, and coaching.
- Wyzant21 employees receive $2,000 annually to use for conferences, workshops, and other developmental opportunities.
- Help Scout22 provides its employees with a "Learn Something" stipend of $1,800. They can use this for various learning opportunities such as conferences, online courses, seminars, and books.
- Peloton offers an annual stipend of $5,250 for specific education-related expenses aimed at promoting and supporting the professional growth of its team members.
9. Childcare stipends
Balancing work and family responsibilities can be challenging for employees with young children. Providing a stipend to assist with childcare expenses can greatly alleviate this stress. This benefit can increase employee loyalty and productivity by allowing parents to focus on their work without worrying about their children's well-being. For example, a company might provide a childcare stipend to support working parents and promote a family-friendly work environment.
A childcare stipend can cover expenses related to:
- Day care
- Backup care
- After-school programs
Here are some companies that offer childcare benefits:
- Facebook provides an annual reimbursement of up to $3,000 for childcare expenses to its employees.
- Snap23 offers subsidized backup child care for up to 80 hours annually.
- Peloton offers subsidized child care and family care through partnerships with Bright Horizons and Urban Sitters for backup assistance.
- Ibotta24 partners with Helpr to offer care support, primary care discounts, and help finding local care centers and caregivers.
- Logikcull25 provides a concierge service through Kinside to support parents in need of daycare. It also offers a $1,000 allowance for new family members through birth or adoption.
10. Family stipends
Offering a family stipend can be a valuable benefit for employees, as it helps to alleviate some of the budget burdens associated with family life. Similar to a childcare stipend, a family stipend can help employees financially and reduce stress, allowing them to stay focused at work. But, your employees can use a family stipend for expenses other than childcare. For example, an employer may offer a family stipend to support employees who double as caretakers in their families.
A family stipend can cover expenses related to:
- Fertility treatment
- Senior care
- Pet care
Here are some companies that offer childcare benefits:
- Adobe26 offers employees adoption and surrogacy assistance up to $25,000.
- Pinterest27 employees receive up to $10,000 for adoption assistance.
- MassMutual28 provides 320 hours of caregiver leave for loved ones in need.
11. Meal stipends
Many companies provide a meal stipend to cover the cost of food for employees. This can be particularly useful for employees who work long hours or have to travel regularly for business purposes. For instance, a tech startup might offer a food stipend to provide employees with healthy and delicious meals to keep them energized throughout the day.
A meal stipend can cover expenses related to:
- Meal delivery services
Here are some companies that offer meal stipends:
- Valon29 provides lunch stipends for employees and has special perks like Bagel Fridays and Tuesday night dinners.
- Snap employees receive a $16 daily stipend on a Snap Meal Card for dining at restaurants and ordering food delivery.
- Ribbon Health provides a lunch stipend for employees who work in the office.
- Morningstar30 offers its employees free daily meals.
12. Pet stipends
Pets are an important part of many employees' lives, and offering a pet stipend can be a unique and appreciated benefit. This stipend shows that you understand and support your employees' personal lives, fostering a positive work-life balance. For example, a veterinary clinic can offer employees a pet stipend that helps them cover routine medical care and supplies.
A pet stipend can cover expenses related to:
- Pet insurance premiums
- Day care services
- Boarding services
- Grooming expenses
- Pet food and treats
- Veterinary bills
Here are some companies that offer pet benefits:
- Rover31 offers its employees $1,000 for adopting or fostering a pet. The company also helps cover pet stays with a sitter on Rover.
- Peloton offers pet insurance to its employees.
- Ibotta offers its employees a variety of discounts on things like pet insurance.
- Clearcover32 provides its staff with pet insurance.
How to offer employee stipends at your organization
Employers can administer stipends on their own, but the administration process is often complicated and time-consuming. It's easier to work with a benefits administrator or software provider.
PeopleKeep’s stipend administration platform helps you set up and manage stipends. You define your stipend allowance, employees submit reimbursement requests, and you approve those requests right from the software. With WorkPerks by PeopleKeep, you can offer a variety of customized stipends to your talented team.
Once you decide how much you want to spend, you can design your stipend benefit to reflect your employees’ needs. You can adjust allowances based on location and other employee classes–like part-time or seasonal. For example, you can offer a $70 remote work stipend for full-time employees and $40 for part-time employees.
Additionally, our model ensures your employees spend their allowances the way you intended. Employees submit proof of purchase for their eligible expenses (other than for certain healthcare expenses). You approve expenses and schedule reimbursement up to the allowance limit from the dashboard. When you offer employee stipends, your employees feel valued and appreciated. They can also help attract new talent. Our 2022 Employee Benefits Survey Report found that 82% of employees say the benefits package an employer offers is an important factor in whether or not they accept a job.
Are employee stipends taxable?
Stipend payments may be taxable depending on your benefits program and what expenses you reimburse employees for.
Stipends for things like health and wellness count as taxable income because they're extra compensation for employees. Employers may need to withhold federal, state, or local income taxes, and employees are taxed on the amounts reimbursed.
Stipends aren't considered wages, so employers don’t need to withhold Social Security and Medicare taxes. However, taxable stipends are considered extra income on employees' tax returns, and employees must pay any associated taxes.
Other stipends are tax-free or tax-advantaged. You can check IRS Publication 15-B33 for qualifying fringe benefits and work with a tax professional to ensure compliance.
Whether you offer a tax-free or taxable stipend, a stipend administrator like PeopleKeep can keep track of your expenses and store employee receipts in case the IRS audits you. You should consult with your accountant or tax professional for further guidance.
Offering a wide range of popular stipends can help you attract and retain talented employees, enhance their overall experience at your company, and foster a positive work environment. Remember to customize these additional benefits based on your employees' needs and preferences, as well as your company's budget. By investing in your employees' well-being and growth, you can create a thriving and motivated workforce.