It’s hard to imagine a forward-thinking, modern workplace that doesn’t prioritize employee wellness. Wellness incentives are a proven way to increase engagement, boost morale, and get employees excited about their company’s wellness program.
These incentives for wellness serve as powerful motivators for building healthy habits and participating in workplace programs. That’s why employers have been investing in wellness incentive programs for decades, because they work.
In this article, we’ll be discussing:
A wellness incentive is a reward offered to encourage employees to engage in behaviors that improve physical, mental, or emotional health. These can be monetary (like gift cards or reimbursements) or non-monetary (like PTO or public recognition).
Companies implement health incentive programs to:
The concept of employee wellness incentives has been around for centuries, but only recently has it been popularized and implemented in the modern workplace. An employee wellness program includes any activity designed to support better health at work to improve health employee performance, productivity and satisfaction.
Work is where most of us spend about two-thirds of the week. If we’re not feeling our best, both physically and mentally, our performance and the balance between work and our personal lives can struggle.
1810:
A Welsh social reformer named Robert Marcus Owen proposed the 10-hour work day. Seven years later, he proposed an even more controversial idea: an 8-hour work day. He even coined the phrase, “eight hours of work, eight hours of recreation, eight hours of rest”.
Early 1980’s:
Workplace wellness programs started to appear in academic literature, mainly focusing on the positive effects and benefits of physical fitness improving employee’s health and performance in the workplace. The Journal of Occupational Health also began publishing articles that discussed how corporate wellness programs could directly contribute to reducing absenteeism and healthcare costs, and even potentially attract top talent in 1982.
The vast majority of workplace wellness programs during this time mainly focused on physical aspects of health. It wasn’t until the late 80’s that companies started to normalize and adopt methods that catered to the psychological side of health and well-being.
1990:
An initiative by the federal government called Healthy People 2000 was launched. It proposed that 75% of employers with 50 employees or more should offer health services as a benefit. This initiative was an attempt to increase the health of the American population by the end of the century.
Programs during this time mainly focused on three areas:
2000’s:
A revised version of the Healthy People 2000 initiative was introduced — Healthy People 2010. It aimed for 75% of workplaces/worksites with 50+ employees to have a “comprehensive health promotion plan” that would consist of five elements:
Yes, but only when thoughtfully designed.
Studies show that programs with personalized, timely, and achievable rewards see significantly higher engagement. According to a Gallup report, 85% of employees said incentives would make them more likely to participate in a wellness program.
Want to understand the ROI? Check out Measuring What Matters: The ROI of Workplace Wellness.
There are many rules and regulations around the privacy of an individual’s health information. Thanks to government organizations like the Equal Employment Opportunity Commission (EEOC) and federal statutes such as Health Insurance Portability and Accountability Act of 1996 (HIPAA), employees have very specific rights and protections over their private health information.
The downside for employers is that some may argue that the nature of wellness programs require employees to publicize their personal health information, which is strictly prohibited by HIPAA and yes, illegal.
So are employee wellness programs legal? In short, yes.
Implementing a completely voluntary wellness program where employees can choose to participate if they’d like typically doesn’t muster up any legal issues. Legal issues may arise when the program is designed to reward only the employees who choose to participate. Essentially, the bigger reward employees get for participation, the greater the possibility for legal issues to arise.
Before implementing a wellness program, it’s important to know the facts about all of the intricacies, legalities and costs associated with the type of program you want to run.
Wellness incentives are taxable by the IRS and emphasizes “how important it is for employers to ensure that they are compliant with all tax withholding and reporting requirements under the tax code”.
Generally speaking, any incentive or reimbursement (i.e. cash reward, gym membership or equipment reimbursed, etc.) given by an employer to an employee is taxable to the employee as wage. Employees should include these earnings on their W-2 as they are subject to federal tax withholdings, Social Security taxes and Medicare taxes.
But good news for employees, there is a way around incentives and rewards being taxed.
Employers can deposit cash rewards and reimbursements directly to a non-taxable Health Spending Account (HSA).
We have also written a few short posts on wellness programs, and their tax considerations if you are interested in exploring further:
To build an effective wellness incentive program, strategy matters just as much as creativity. These best practices will help employers maximize impact while minimizing complexity:
If your program is ongoing with many milestones, you may want to offer many small prizes, incentives or rewards periodically throughout. If your program has more of a one-and-done structure, you’ll probably want to offer larger, lump sum rewards.
It’s a waste of your valuable time and money to choose the incentives you’ll be offering without first asking your people what they want. As we mentioned earlier, the most effective way to tackle this is with pulse surveys. Learn more about pulse surveys and how to implement them here.
Offering everyone a new car as a reward for running a marathon would be amazing, but there’s nothing more embarrassing than making promises that exceed your capabilities. You’ll want to decide on a budget and choose the incentives you’ll be offering accordingly.
If your budget is on the lower side, that doesn’t mean the value of your incentives has to be lower too. To some, an extra PTO day or even extra break time is more valuable than a tangible or monetary reward.
Personalization boosts effectiveness. Let employees choose between multiple rewards or offer a ‘menu’ of prize options based on participation tiers.
Keep redemption simple. If your reward process is time-consuming or confusing, participation will drop. Make it easy for employees to claim their incentives.
Incentives don’t need to be expensive to be effective. Some simple ways to use wellness program incentives include:
Need help crafting the right mix of benefits and rewards? Explore our “How to Incorporate Wellness Prizes for Employees” blog for ideas.
Looking for real-world wellness incentive program examples to get inspired? Here’s a curated list based on our top-performing incentive ideas:
Offer small-value gift cards to employees who complete a monthly wellness task, like walking 10,000 steps a day or joining a group yoga session.
Provide flexible wellness stipends for therapy, meditation apps, fitness subscriptions, or creative outlets. This is one of the most impactful wellness incentives for employees today.
Reward high engagement or challenge winners with extra time off. It’s simple, low-cost, and meaningful.
Gamify your program with a board of healthy habits: drink water, meditate, stretch, walk outside. Offer a prize for a completed row or board.
Let employees donate their reward value to a cause of their choice. This is great for purpose-driven workplaces.
Encourage collaboration and camaraderie through team step challenges or mindfulness goals. Reward the whole team with a lunch or outing.
Offer free or discounted access to wellness apps (like Calm or Headspace), streaming fitness classes, or even monthly snack boxes.
Instead of just branded t-shirts, think about fun, useful, or customizable swag like cozy blankets, yoga mats, or wellness journals.
Tickets to a concert, cooking class, or escape room can be far more memorable than cash.
Recognize the top wellness performers each quarter with a trophy, small bonus, or exclusive perk.
Effective health incentive programs are those that feel relevant, accessible, and valuable. When done right, incentivizing employees doesn’t just boost program participation, it builds a healthier, more engaged workplace culture.
Ready to take your wellness incentive program to the next level? Book a call with our benefits team to discover how IncentFit can help.
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