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Wellness HRAs vs. wellness employee stipends

Written by: Chase Charaba
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Published on July 26, 2022.

While many organizations offer health benefits, these benefits alone may not go far enough to support the wellness initiatives your employees desire. Employee wellness is an essential part of your employee compensation package.

According to MetLife's 2022 Employee Benefits Trends Study1, 52% of employees said health and wellness programs like gym memberships are a must-have in the workplace. But, only 33% of employers said they provide or plan to offer these wellness benefits.

As you expand your benefits offerings to attract and retain top talent, implementing an employee wellness program is an excellent option. But, with so many types of wellness programs available, which one do you choose for your employees?

Personalized wellness benefits are a great way to offer an individualized wellness program to your employees. Two popular personalized benefits options are wellness health reimbursement arrangements (HRAs) and wellness employee stipends.

In this article, we'll explain the difference between wellness HRAs and wellness stipends, how a wellness program can help your organization, and what expenses are eligible for reimbursement in each program.

Get more tips on offering a wellness program with our complete guide to employee wellbeing!

What is a wellness program?

A workplace wellness program is designed to help your employees live healthier lives by improving their holistic wellbeing. Some programs promote physical activity and your physical health, while others focus on mental health.

Employers generally sponsor wellness programs through a third-party vendor, but some organizations and payroll services offer them directly to their clients, helping to save you the administrative hassle.

What are examples of wellness programs?

There are many types of effective wellness programs available for your organization. You can choose to focus on one area or combine multiple types into a more holistic plan.

Common wellness programs include:

  • Health coaches
  • Health assessments and health screenings
  • Disease management programs
  • Weight management programs
  • Smoking cessation programs
  • Vaccination clinics
  • Stress management programs and other mental health initiatives
  • Fitness challenges
  • Providing free or low-cost wellness resources, such as classes or experts
  • Offering healthy snacks or meals

Why offer corporate wellness programs?

In a tight labor market, job seekers need a more considerable incentive to apply for open positions. Providing a robust employee benefits package and additional perks helps your organization attract and retain employees.

Additionally, employee health affects your profits. Healthy employees are often the most productive employees because they take fewer sick days and miss less work. Unhealthy employees and those who smoke are often the least productive due to more frequent breaks and sick days.

Implementing a wellness program can help reduce the risk of health issues your employees face, allowing them to be more productive and engaged at work. Additionally, promoting healthy lifestyles can increase the overall mood of your employees, which contributes to positive company culture.

Wellness programs that support physical and mental health can promote illness prevention and financial wellbeing for your employees.

MetLife's benefits study also found that 51% of holistically healthy employees were likelier to continue working at their current organization for at least 12 more months.

What is a wellness HRA?

The federal government allows employers to provide tax-free wellness care to their employees through an HRA. While most premium-plus HRAs allow you to reimburse your employees for qualifying medical expenses and health insurance premiums, you can restrict HRAs to only qualifying wellness expenses. This is known as a wellness HRA.

A wellness HRA can offer pre-tax coverage for wellness and preventive care, including:

  • Periodic health evaluations (e.g., annual physical exams)
  • Routine prenatal and well-child care
  • Child and adult immunizations
  • Smoking cessation programs
  • Doctor-supervised weight loss programs with a medical determination letter
  • Preventive care screenings such as mammograms

A wellness HRA saves your organization money in the long run compared to healthcare costs and traditional employee wellness plans. It can be easily integrated with your existing health plans from your insurance company to extend your wellness coverage.

You can also offer an HRA to provide health benefits to your employees instead of a group health insurance plan by reimbursing employees for individual health insurance premiums and other qualifying out-of-pocket medical expenses.

Three of the most common types of HRAs are:

However, while an HRA is an excellent health benefit, it doesn't cover some of the most common wellness activities and perks, such as gym memberships or weight loss programs for general health. If you're looking for a flexible way to provide additional wellness perks, a wellness stipend might be for you.

What is a wellness stipend?

Similar to a wellness HRA, a wellness stipend is a flexible benefits option that allows you to provide a monthly allowance to your employees for their wellness expenses. You can do this through a lifestyle spending account (LSA) or expense reimbursement.

Unlike an HRA, wellness stipends are taxable and designed for wellness expenses that HRAs and health insurance don't generally cover. Wellness stipends are not a substitute for health coverage, such as HRAs.

Thanks to the flexibility of being a taxable benefit, your employees can choose to be reimbursed for a variety of activities and programs, empowering them to take control of their benefits and use their allowances for the expenses that matter most to them.

With a wellness employee stipend, you can reimburse your employees for a variety of wellness expenses, including:

  • Wellness mobile apps, such as those for fitness or meditation
  • Gym or studio memberships
  • Exercise/fitness class fees
  • Wearable devices such as fitness trackers
  • Home exercise equipment

Because wellness stipends are taxable, you can choose which reimbursements to approve or deny. This means that you can extend the eligible categories to any expenses you want to allow your employees to use their allowances on, such as biometric screening, a weight management program, or mental health programs.

With a wellness stipend, you're giving your employees the opportunity to live a healthier lifestyle, manage chronic conditions, and support their emotional well-being. These perks will only come back to help them succeed at work, helping your organization achieve its goals.

Conclusion

Wellness programs are great tools for increasing productivity, retaining employees, and attracting new workers. By helping your employees live healthier lives, you'll see an uptick in employee morale and engagement, fewer employees taking sick leave, and many other benefits.

There are many options for wellness programs and educational resources, all of which target different needs. It's best to ask your employees to see which type of wellness program is best for their needs. However, wellness stipends are the most flexible and inclusive option that allows your employees to get reimbursed for the expenses that matter most to them.

If you're interested in offering a wellness stipend to your employees, PeopleKeep can help! Our employee benefits administration software makes it easy to manage HRAs and employee stipends in just minutes each month.

Schedule a call with a personalized benefits advisor today to learn how wellness stipends can fit into your benefits package

This blog article was originally published on June 13, 2012. It was last updated on July 26, 2022.

1. https://www.metlife.com/employee-benefit-trends/2022-employee-benefit-trends/

Originally published on July 26, 2022. Last updated July 26, 2022.
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