Benefits Strategy

Gym Reimbursement Programs: The Top Mistakes

Written by Maria

Workplace wellness employee benefit programs are in place in a growing number of companies (companies like Google are actually setting the standard for a world-class employee benefit program), and one of the most common is the Gym Reimbursement Program, or Fitness Subsidies. The idea is great, in theory: companies provide employees with a discount or a reimbursement on gym or fitness facilities, these programs are usually the sharpest tool in an overall compensation package.

If you’re considering implementing gym reimbursements in your workplace, here is some key information you should consider before rolling out your program.

What is a Gym Reimbursement Program?

A gym reimbursement program is a type of employee perk that allows employees to be reimbursed for gym membership fees or other fitness-related costs. Employers often provide this sort of program to encourage employees to maintain their physical health and well-being, and it may be part of a wider employee wellness program.

Employees may be able to claim compensation for gym membership fees, personal training sessions, fitness programs, or other fitness-related expenditures under a gym reimbursement scheme. Employees may be required to satisfy particular requirements, like as utilizing the gym a certain number of times per week or month, or meeting specified fitness objectives, in order to be eligible for reimbursement. However, utilization related rules are dependent on your program goals, and company culture.

As a leader, you may be in charge of developing and administering a gym reimbursement program at your company. This might include working with employees to create fitness objectives, measuring employee progress, and ensuring that employees are following your program’s rules. You may also be in charge of managing the program’s budget and ensuring that it is used efficiently to enhance employee health and well-being. Read on to learn more about how to get the most out of your gym reimbursement program!

Is a Gym Reimbursement Program different than a Gym Subsidy?

Gym reimbursement programs are similar to gym subsidy programs in that both are designed to incentivize employees to regularly go to their local gym. However, the difference between the two lies in the how the financial incentive is delivered to your employees.

Employees who participate in a gym reimbursement program are responsible for paying for their gym memberships, or other fitness-related expenses themselves, and then file a claim to be reimbursed. Therefore the onus is on the employee to get the ball-rolling, and put “skin in the game”.

Gym subsidy programs are administered differently, as employers just provide a subsidy to their employees either as a one-time payment, or on an ongoing basis (monthly, weekly, quarterly, etc.). Gym subsidy programs may have the added advantage of helping your employees with their cash flows. Contrasting this to gym reimbursement programs where employees get reimbursed for their memberships after they’ve already paid for them.

10 Reasons why employers should implement a Gym Reimbursement Program?

Employers should explore using a gym reimbursement program at their company for a variety of reasons, including:

  1. Promotes physical health and well-being: Employers may assist lower the risk of health problems such as obesity, heart disease, and diabetes by encouraging employees to maintain their physical fitness via regular exercise.
  2. Improves employee morale: Employee morale may be improved by demonstrating that the employer cares about employees general well-being and is prepared to invest in their health through a gym reimbursement program.
  3. Increases productivity: Exercise has been demonstrated to boost cognitive function, resulting in higher working efficiency.
  4. Reduces absenteeism: A gym reimbursement program may help minimize absenteeism by encouraging employees to be physically fit, resulting in fewer sick days.
  5. Increases retention: A gym reimbursement program can be a great value-add perk for employees, increasing their likelihood of remaining with the firm.
  6. Reduces healthcare costs: Employers may be able to minimize their healthcare expenditures over time by encouraging employees to maintain their physical health.
  7. Increases employee engagement: A gym reimbursement program can assist to engage employees by allowing them to participate in a pleasant and rewarding activity.
  8. Improves team building: A gym reimbursement program may encourage employees to exercise together, which may improve team cohesiveness and communication.
  9. Offers flexibility: Depending on your implementation method, employees may select the club or fitness facility that best meets their requirements and time constraints.
  10. Attracts top talent: A gym reimbursement program is a great way to show prospective employees that you care about your teams well-being, and increasing the appeal of your company as well.

Are Gym Reimbursements taxable?

Gym reimbursements made by an employer may be taxable if they are considered part of an employee’s pay. If an employer offers a benefit to an employee, it is normally taxable as income under IRS regulations unless specifically exempt by tax law.

That being said, this basic guideline has a few exceptions that may apply to gym reimbursements. If an employer provides a gym reimbursement as part of a qualified wellness program, it may be exempt from taxation. A qualified wellness program is one that is offered to all employees and is aimed to promote good health or avoid illness.

Additionally, if an employer provides a gym reimbursement as part of a qualified transportation fringe benefit, the reimbursement may be excluded from an employee’s taxable income. A qualifying transportation fringe benefit is a benefit granted to an employee to offset the expense of taking public transportation or carpooling to and from work.

It’s important to note that certain requirements must be completed in order for the gym reimbursement to be excluded from an employee’s taxable income under these exceptions. For more information on these exceptions, employers should speak with a tax advisor or refer to IRS guidelines.

Top Mistakes when Implementing a Gym Reimbursement Program

Using a paper-based system

One of the biggest problems with gym reimbursement programs is the paperwork. Unless you’re willing to take your employee’s word for it that they’ve purchased membership then you’re going to need to ask them for receipts. Many programs also ask for employees to submit attendance records from the gym. Unfortunately this means that your HR department will have review all that paperwork. Without a plan or a process to automate this new paperwork, you’re in for a nightmare.

Not integrating with payroll

Even if you can verify employees went to the gym, you still have to reimburse them for their gym membership. This adds a new level of complexity to payroll. Employers are left with the choice of either integrating the payments with their existing payroll provider, or spending hours writing checks to employees. Managing this in a large organisation can eat up HR staff’s time, and without a proper management system you’re almost guaranteed to make mistakes.

Limiting gym choices

Employees like to exercise when it’s convenient for them. Having a corporate gym deal with a prestigious national gym chain won’t change this: if your gym locations are not convenient then employees aren’t going to use them. Moreover, many employees don’t like working out on-site, so be wary of investing lots of money in building an office fitness facility. The best option is to work with as many different fitness facilities as you can. Consider working with another company that has relationships with many gyms.

Assuming all employees use a gym

Employees work out in all different ways. Some prefer the privacy of their own home (especially employees new to a fitness routine); others prefer gym chains with all the perks. The goal of a gym reimbursement program is to get employees active and healthy. Make sure your program does not discount those who get their exercise by doing yoga, rock climbing, swing dancing, tightrope walking, or any other of the many ways to be active. When planning a program avoid exclusivity and try and find a solution that works for everyone.

Too much stick, not enough carrot

Don’t ever create a culture that pressures your employees to get active. Instead foster a culture where all employees are motivated to be active. A more comprehensive program, like an Incentive-based Fitness Rewards Program (FRP) aims to influence employee behaviors using small rewards, usually cash. Some employers also offer paid time off as a reward. Employers usually manage these rewards through incentive management systems, like IncentFit.

As recent survey shows, employees prefer cash incentives over all other types of wellness program rewards. Creating a program that rewards a wide variety of activities is going to get the highest engagement. If you would like to gauge your employees thoughts on your employee benefit offerings, feel free to use our complimentary employee benefits survey template!

On that note, here are a few quirky perks that companies are using to attract employees, after all employee benefit programs are meant to make retention and recruitment easier! Also, here are some unexpected wellness perks that you should offer. However, it is important to note that perks alone don’t create company culture.

Being too serious

Remember, work is serious, but employees can still have fun. Be sure and foster an environment where you can improve company culture with a little friendly competition. Going to the gym should not just be another task to check off on their to-do list. Encouraging participation through fun group fitness activities and fitness challenges will make the program seem more like a perk, and less like a requirement.

We hope these mistakes will steer you in the right direction when designing your company’s wellness program. We designed our own Lifestyle Reimbursement Program to solve these mistakes. Just remember that whatever solution you choose, be sure that it puts the health and happiness of your employees first!

Corporate Wellness Benefit Managers having a discussion while looking at an electronic tablet.

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