Wellness HRAs vs. wellness employee stipends

Employee wellness is an essential part of your employee compensation package. However, while your organization may offer health benefits, they may not go far enough to support the wellness initiatives your employees desire.

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 reevaluate your benefits offerings to better attract and retain top talent, implementing an employee wellness program is an excellent option. But, with so many types of wellness benefits available, which one can you leverage to create the best program for your employees?

Personalized wellness benefits can help you build an individualized wellness program for your employees. Two flexible 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 through each type of benefit.

What is a wellness program?

A workplace wellness program is a type of initiative aimed toward improving the health outcomes of your employees. You can design your program to enhance employees’ mental and physical health and fitness. These programs can offer employees premium discounts, cash rewards, gift cards, gym memberships, and other types of incentives for their active participation.

Employers generally sponsor wellness programs through a third-party vendor, but some organizations build programs in-house with the support of existing administrative tools like payroll services.

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 employee wellness programs include:

• Health coaching
• Health assessments and health screenings
• Fitness or wellness classes
• Fitness or wellness challenges
• Disease management programs
• Weight management programs
• Smoking cessation programs
• Vaccination clinics
• Stress management programs and other mental health initiatives
• 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. Our 2022 Employee Benefits Survey Report found that 82% of employees say an employer’s benefits package is an important factor in whether or not they accept a job. Therefore, a robust employee benefits package and additional perks can help your organization attract and retain employees.

Additionally, employee health affects your company's profits. Employees who take care of their mental health and physical wellness are often the most productive because they take fewer sick days and miss less work. Unhealthy employees are often the least productive due to more frequent breaks and sick days.

A wellness program can help reduce your employees’ health risks, allowing them to be more productive and engaged at work. Additionally, promoting healthy lifestyles and wellness goals can increase the overall mood of your employees, which contributes to positive company culture.

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

Plus, wellness programs go hand-in-hand with job satisfaction and engagement. MetLife's 2023 Employee Benefits study² found that those who felt cared for when working were 92% more likely to feel engaged at work. They were also 65% more likely to be loyal to their employer and 56% more likely to be more productive.

What is a wellness HRA?

The federal government allows employers to cover the cost of employee wellness care, tax-free, 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. You can easily integrate it with your existing group health plan from your medical insurance company to extend your wellness coverage.

You can also offer a stand-alone 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:

• Qualified small employer HRA (QSEHRA)
• Individual coverage HRA (ICHRA)
• Group coverage HRA (GCHRA), also known as an integrated HRA

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

What is a wellness stipend?

Another way to support the healthy behaviors of your employees is with a wellness stipend. 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 can’t legally cover. Wellness stipends aren’t a substitute for health coverage, such as HRAs.

Thanks to the flexibility of being a taxable benefit, you can give your employees money 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, your employees can pay for various wellness expenses like the following:

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

With a wellness stipend, you're giving your employees the opportunity to improve their health outcomes. They can live a healthier lifestyle, manage chronic diseases, and support their emotional well-being. In return, these perks can help them succeed at work, helping your organization achieve its goals.

Conclusion

Workplace 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 health goals. It's best to ask your employees to see which type of wellness program is best for their needs. When it comes to benefits to support these programs, 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 an HRA to your employees to cover their health and wellness expenses, PeopleKeep can help! Our HRA administration software makes it easy to manage HRAs in just minutes each month.

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

This blog article was originally published on June 13, 2012. It was last updated on August 4, 2023.