Corporate gym memberships are a great fringe benefit that employers offer to their employees in order to encourage a more healthy, and active workplace culture. It’s also a key company perk that helps employers be proactive in improving their population health, as they say prevention is better than the cure.
That being said, we’ll dive deep into this employee benefit, so that you have all of the information that you need in order to implement a corporate gym membership program at your company!
Read on to learn more about this topic! Click on the sections below to jump right to your specific question.
- What are corporate gym memberships?
- Why do companies offer gym memberships?
- Are corporate gym memberships a taxable benefit?
- What if our workplace has their own gym?
- Should employers offer gym memberships?
- How much does a company pay for Gympass, ClassPass, and similar platforms?
- How to implement a corporate gym membership program?
What are corporate gym memberships?
Corporate gym memberships are essentially subsidized reimbursements, or stipends that employers offer to their employees, so that they can enroll at a gym or fitness facility. Smaller employers simply offer employee gym memberships as a reimbursement. Some employers also go one step further, by allowing their employees to join any wellness related facility (think Yoga, Pilates, etc.,).
Typically employers will strike a partnership with a local fitness facility in order to offer their employees a discounted rate, or they will tap into a gym network. Employees are then able to take advantage of discounted rates, at selected gyms. However, corporate gym memberships that are set up in this manner are not always the most effective.
According to DataHub, corporate gym memberships made up just 2% of all gym memberships out of a cohort of 270,000 gym memberships. Also 24% of corporate gym memberships were never used. We will discuss the reason behind these stark statistics later on in this post, and how you can counter it, so that you see maximum utility and utilization for your employees.
Why do companies offer gym memberships?
Companies that offer gym memberships usually do so to promote healthy behaviors, while using this employee benefit as a recruitment and retention tool as well. Healthy lifestyles are becoming increasingly mainstream, and employers that tap into this trend are able to build a strong employer brand.
Here are some common reasons why companies offer gym memberships:
- Promotes a Workplace Culture that prioritizes Health and Corporate Wellness
Healthier people are generally happier, so when an employer rallies employees around this shared theme, it improves the energy and overall culture of a workplace. Also, having healthier employees also prevents disease, or spread of illness. Employers who are able to motivate their employees to be healthier will decrease health risk factors, and may even see reduced insurance costs. Some insurance companies offer their own wellness reimbursement program as well, such as the Cigna gym reimbursement program, humana wellness program, or the Go365 program by Humana.
- Improve Employee Morale & Team Camaraderie
As an employer, if you show your employees that you care about their mental and physical wellbeing through a corporate gym membership program, you are showing them that you care about them as a person. Generally companies see retention soar when employees feel cared for. Also your employees may end up forming friendships with their peers who enjoy the same types of fitness activities, that they can take advantage of through your corporate gym membership program.
- Cost Effectiveness
Corporate gym memberships can often be written off, for tax purposes (but more on this later). This way employers can offer employees a popular corporate wellness benefit, without having to foot the full cost of it. In addition, as you start to see a high utilization rate, your employees will reduce their health risk factors, which will in turn reduce company insurance premiums.
Are corporate gym memberships a taxable benefit?
Please consult with your accountant before actually offering corporate gym memberships. However, corporate gym memberships are generally a tax deductible benefit, and companies can claim them as expenses. Here’s how:
- Sole proprietors, or single-member LLCs can deduct gym memberships on Schedule C under the “Expenses” section
- Partnerships or multiple member LLCs can use Form 1065 to claim these expenses
- Corporations can expense gym memberships as a deduction on Form 1120.
Employers who offer on-site gyms, or on-site fitness centers can see additional tax incentives. According to the IRS wellness program regulations, employers can deduct the value of an employee’s use of an on-site facility from an employee’s wages, if the facility is exclusively used by employees and their direct families (dependent children under 25 years of age).
Once again it is best to consult with your accountant before rolling out a gym membership program.
What if our workplace has their own gym?
On-site gyms offer employees a great way to get a workout during the day. Generally these facilities may get around the same amount of usage as a corporate gym membership, just because the one-size fits all approach is not the right way to go about helping your employees build healthy behaviors. That being said, here are some some ways to improve the experience, and usage of your onsite gym:
- Add in some digital fitness, or wellness options for people who prefer to exercise at home
- Make sure that your facilities are hygienic and safe for all
- Market the various fitness options that are available at your on-site gym
- Try using fitness technology to enhance your gym experience, this way you can personalize the experience for your employees
- Ask your employees for feedback to see what’s working, and what can be improved
- Try offering group fitness classes, so that people feel safe and encouraged by each other
Should employers offer gym memberships?
While corporate gym memberships programs definitely have their perks, the challenge with this type of program is that utilization rates may be low. As referenced earlier, corporate gym memberships made up just 2% of all gym memberships out of a cohort of 270,000 gym memberships. The reason for this is that wellness, and fitness is not a one-size-fits all type of program.
Corporate gym membership programs are usually limited to a discount negotiated with a local gym chain, or discounts available through a gym network. This is great, but what about the facilities that don’t fall into this list of discounted facilities? Wellness should be personalized, and employees should be able to choose how they would like to go about their personal wellness journey. That’s why one size fits none, and you need to consider providing your employees with a more flexible approach than a corporate gym membership program.
How much does a company pay for Gympass, ClassPass, and similar platforms?
Here is a breakdown of pricing for Gympass, ClassPass and similar platforms.
Gympass: Employee membership fees start at $11.99/month per Employee
- This gets you access to gyms within their network
ClassPass: Employers can pay for a monthly credit plan, with prices ranging from $39 – $119/month per Employee
- Employees can use the credits to book classes and appointments at facilities within their network
Are GymPass, ClassPass and similar platforms effective?
The challenge with these platforms once again is that there isn’t something for everyone. Your employees are still at the mercy of the strength of Gympass and ClassPass’s facility network. On top of that, there are lots of user experience related issues that make these types of platforms challenging, and leaves employees dissatisfied with your offering.
Another challenge is that these platforms are only as strong as their networks, and if your employees want to take advantage of facilities that are not in these platforms’ networks, they are out of luck.
How to implement a corporate gym membership program?
This comes down to figuring out what works for your culture, and if you want to see a real impact from your corporate gym membership program. Offering discounts to a select few gyms, based on a gym network will be limiting because it excludes employees who don’t with to use those facilities. Platforms like ClassPass and Gympass are slightly better than offering a gym network, but they may be prohibitively expensive, and won’t offer your employees the utility that you are looking to provide them with.
At IncentFit, we usually recommend that employers take one of these three routes, in order to offer a ‘corporate gym membership’ type program that actually gets used & loved by employees:
- Reimburse Employees for Lifestyle Purchases (starting at $1.74 per employee per month): Empowering employees to get reimbursed for anything (ex., gym memberships, tuition costs, professional development, etc.,). This way you have something for everyone!
- Allow employees to submit reimbursement claims for qualifying purchases that are defined by your human resources administrators
- Our in-house customer support team will manually review, and confirm all claims and activities submitted by employees
- Our system will automatically distribute funds to employees on your behalf!
- The options with lifestyle reimbursements are endless. Employers have used this solution to set up:
- Employee Food Allowance benefits
- Day care benefits for employees
- Cell phone reimbursement policy for employees
- Education stipends
- Work from home stipends
- Travel stipend for employees
- Lifestyle spending account for employees
- Lifestyle benefits
- Wellness reimbursements
- Fitness reimbursement program for employees
- Tuition reimbursement benefits
- Various types of employee stipends
- Empower Your People to Build Healthier Habits with Activity Rewards (starting at $1.49 per employee per month): You can use activity rewards, to help reward employees when they complete healthy activities (usually tracked through fitness/wellness apps and devices).
- Your HR administrators can choose from hundreds of health & wellness activities that they would like to encourage employees to do more of.
- For example, you can reward employees when they go to a fitness/wellness facility of their choosing (no longer dependent on discount networks, or facilities that are included in a platform)
- Set up your reward types (choose from 6+ types of reward payout options)
- Choose your frequency, and time periods for payouts. We will automate the rest for you!
- Create Customizable Wellness Challenges & Rewards that Get Real Engagement Results (starting at $2.76 per employee per month): This solution drives industry-leading monthly engagement levels, averaging over 58% usage on a monthly basis. This way we put every dollar to work in increasing engagement, building healthier, happier and more cohesive teams.
- Create your own incentive strategy, to reward employees for healthy activities that they complete
- Build stronger teams, with customizable wellness challenges. Choose from dozens of pre-built, customizable challenge tracks that align with your team’s unique goals
- Empower your employees to adopt healthier lifestyles with personalized, tracked goals. You can incentivize completion of these goals as well!
- Annual health risk assessments, so that you can show senior management how your wellness program is impacting health outcomes at your company
All of the three solutions above are significantly more cost effective than Gympass, ClassPass, and related platforms. You also have the added benefit of offering a program that:
- Gets High engagement rates from employees
- Makes a significant impact on improving workplace culture
- Actually shows employees that you care, by letting them choose how they want to improve their health and wellness
- Boosts recruitment and retention efforts
If you would like to learn more about fringe benefits, check out this guide on the different types of fringe benefits you can offer.
We would be happy to give you an idea of how these solutions will work for your company, and the impact that they can create! Feel free to schedule a complimentary call with one of our benefits experts, we look forward to helping you!