Are you interested in learning the definition of a fitness reimbursements and how to implement one at your company?
With options ranging from onsite gym facilities, and online wellness subscription services to a host of wearable devices and apps at our disposal, it’s difficult to know which is the best fit for any organization.
Even more challenging is knowing what information to look for in a fitness reimbursement program that will provide maximum value and your employees an effective way to stay healthy.
If this resonates with you, we can answer all your questions. This article includes everything you need to know about fitness reimbursement, and how to offer this fringe benefit. If you would like to learn more about fringe benefits, check out this guide on the different types of fringe benefits you can offer.
Table of Contents
- What is a Fitness Reimbursement Program?
- What are the Benefits of a Fitness Reimbursement Program?
- 3 Considerations to ponder before Implementing a fitness reimbursement program
- How do you implement a fitness reimbursement benefit?
- Is a fitness reimbursement program a taxable benefit?
- Conclusion
What is a Fitness Reimbursement Program?
For those unfamiliar with the term, a fitness reimbursement program is where the employer reimburses employees for expenses related to their fitness goals; some examples include purchasing new equipment, paying for a personal trainer and coaches, paying for outside classes (like Pilates and Yoga), etc.
Some companies sponsor employees’ gym memberships (through corporate gym memberships) or offer subscription programs that cover medical expenses for weight loss and/or exercise-related diseases. Fitness tracking devices and apps are also becoming more popular and prevalent to get employees active and involved in their health and well-being.
About three in four current or former users of wearable fitness trackers say they find them very (30%) or somewhat helpful (46%). Even more health app users (82%) say they find them very (29%) or somewhat helpful (53%)
What are the Benefits of a Fitness Reimbursement Program?
- Reduce healthcare costs
- Increase in productivity
- Competitive advantages
- Boost in employee engagement
- Reduce absenteeism and presenteeism
- Establish a healthy culture
- Reduce stress
- Retention of employees
- Attract top talent
- Increase company value
1. Reduce in healthcare costs
Incentivizing workers to participate in a fitness program, can help lower your company’s overall healthcare costs by reducing the number of sick days by employees each year.
A study conducted by Gallup found that those who participate in fitness programs at work are 40% less likely to develop a health condition than those who don’t.
“With the average gym membership cost now over $100 per month and health insurance premiums linked to a number of hours worked, an employee getting sick has a direct financial impact on his employer.”
With the rising costs of medicare and healthcare premiums, it’s important for companies to look at how any further increases in costs can be curbed.
2. Increase in productivity
When employees achieve their fitness goals (like running a 5k or being a participant in a sport of their choice), it boosts their morale and productivity.
Also, when employees start to prioritize their health, it can help them make other healthy decisions in other areas of their lives. (eating better and drinking less can help boost productivity as well).
In another study by Gallup, researchers found:
“Achievement sparks pride. When an employee achieves the task of becoming healthier, the pride and satisfaction that come from the accomplishment can lead to increased motivation and continued positive behaviors. The positive cycle continues, leading to greater engagement in workplace activities.”
3. Competitive advantages
It’s pretty well-known that at many companies employees care about the benefits they receive.
Most employee benefits managers have already had ample opportunity to meet with their HR department and request fitness reimbursements as one of their company perks. Some of the world’s biggest businesses have made exercise a top priority. Goldman Sachs, Nike, and Apple are just some of the major employers that offer significant fitness reimbursement and subsidies.
4. Boost in employee engagement
Having a friendly and fun fitness reimbursement program at your company can help make employees more engaged with their jobs because they’ll feel more fulfilled. We’re well aware of the positive effects employee engagement can have on your bottom line.
The Gallup poll found that 36% of Americans are “engaged” at work and the number increases significantly when employees have access to wellness benefits such as a fitness reimbursement, tuition reimbursement, or wellness reimbursement (some employers even offer non-wellness benefits such as a cell phone reimbursement policy.
5. Reduce absenteeism and presenteeism
Fitness reimbursement programs play a crucial role in mitigating absenteeism and presenteeism in the workplace by promoting employee well-being and overall health. By incentivizing physical activity through financial support for gym memberships, wellness classes, or fitness equipment, these programs encourage employees to adopt healthier lifestyles. Regular exercise not only boosts physical fitness but also enhances mental well-being, reducing stress and fatigue. As a result, employees are less likely to take sick days due to illness or stress-related issues.
Moreover, increased energy levels and improved mood contribute to higher productivity and engagement at work, reducing the impact of presenteeism. By investing in the health of their workforce, companies foster a more vibrant and resilient organizational culture, ultimately leading to better overall performance and lower healthcare costs.
6. Establish a healthy culture
A fitness reimbursement program can foster the growth of a culture dedicated to health and physical fitness in your company by promoting healthy living and good working habits.
The links between a workplace culture to a healthy physical lifestyle for employees and their families cannot be understated and companies offering wellness interventions are more likely to enjoy a healthy company culture on the whole.
Research by the Rand Corporation found that: Wellness efforts yield a return on investment of $1.50 for every $1 invested. Investing in programs that target chronic diseases, such as diabetes and obesity, leads to an ROI of $3.80.
7. Reduce stress
I bet you know all about burnout. It’s a huge problem and is increasing rapidly around the globe.
Burnout is a major problem facing many employees but it was only really brought to the forefront during the 2020 Global pandemic. Employers were forced to get serious about how they handle wellness as they witnessed unparalleled productivity decline due to employees being “burnt out”.
According to a study by Mayo Clinic:
“A cumulative 20% increase in sick days from stress, depression or anxiety costs employers $23 billion annually.”
8. Retention of employees
A fitness reimbursement program can reduce churn and increase retention rates.
A study by the International Journal of Workplace Health Management found a connection between employee chronic disease and job-related health problems. The authors also found that employees with healthy habits are less likely to quit their jobs.
“For every 10% increase in employees with healthy lifestyles, employers can reduce their turnover costs by $3.5 billion annually,” said Dr. Stephen Ilardi, one of the study’s authors. You can also offer a fitness reimbursement through a lifestyle spending account or lifestyle benefits (sometimes employers add day care benefits for employees to an LSA account as well), to make it more inclusive to employees who practice other forms of wellness.
So, I guess the question becomes, can you afford not to have one?
9. Attract top talent
Boomers are fading into obscurity while GenX and Millenials are gradually losing ground to the scores of GenZs entering the workplace.
And with this new generation, a paycheck alone is not enough to win them over. These job seekers are increasingly looking for organizations that focus on physical and mental wellness.
Offering this wellness benefit to your employees can be an effective way to showcase your company’s commitment to the health of its employees and is also a great way to attract individuals who care about these things.
10. Increase company value
If your company wants to differentiate itself from other companies, this is an excellent opportunity to do so.
Organizations are always looking to provide added value to their customers and it would be foolish not to look for a way to show our employees that we care about them as individuals. That way, they’ll feel more valued and will want to stay with us longer.As mentioned earlier, physical fitness and mental health go hand-in-hand. They’re very closely linked because when employees are mentally healthy they’re physically healthy as well.
3 Considerations to ponder before Implementing a fitness reimbursement program.
You should assess and discuss the financial benefits:
Reimbursements should be calculated to help determine if they are worth the investment. Make sure to carefully analyze the financial eligibility and fees to determine if they are worth the risk.
Try to offer discounts but be sure to factor in the cost of your program before finalizing any reimbursement levels.
Run everything through payroll! At the same time, you may want to consider offering a lifestyle spending account (because it can cover popular reimbursements such as a fitness reimbursement, education stipend, work from home stipends, travel stipend for employees, and much more). If you are considering a lifestyle spending account, you can tie in your employee stipends to make it more robust!
Make sure you use the right tools to reimburse employees. You should run everything through payroll to Keep track of receipts and documentation. If you’re thinking about doing this manually, it’s not going to work!
Also, be sure that you offer a diverse range of options that take each employee’s financial situation into consideration. This can help you to avoid a one-size-fits-all program that you might regret later on.
It pays to offer incentives that are accessible:
Accessibility and inclusivity should be high on your priority list. Incentives should be made available to all employees and not just those in your high-performers club.
You will need to make concessions for those who suffer from different forms of physical and mental disabilities. Also, don’t tie a fitness reimbursement program in with other incentives such as performance bonuses or incremental salary increases and other benefits until you see employee participation rates increase.
Make sure that you don’t create obligations for employees:
You want your employees to respond to your fitness program, but also you don’t want them to feel pressured into participating.
For example, you don’t want one employee pressuring other employees into participating, which could create a potential liability for your company.
Additionally, make sure that there aren’t any obligations associated with participation in a fitness program, and make a point of getting all your ducks in a row when it comes to the paperwork.
How do you implement a fitness reimbursement benefit?
The first step is to determine what your company budget is. The second step would be to communicate the news with staff and get them to collaborate on plans that will work best for them. This helps you gain their buy-in before the implementation of the program begins.
Remember, a fitness reimbursement program is not a one-size-fits-all so you will need to create individualized plans for each employee suite that focuses on their needs and expectations. And look at ways to make those plans as sustainable and flexible as possible.
1. Create a flexible budget:
The cost of fitness is not fixed and might fluctuate, which means you might require to look at several options.
No two people are alike, so don’t assume that a flat rate will work best for everyone. It won’t! One employee might need more guidance than another so allow them some one-on-one coaching.
Offering flexible payment options can give employees complete control over how they want to spend their reimbursement.
2. Focus on ease of access
The last thing you want to do is create a program that’s difficult to access and manage. Overcomplicating things creates a barrier of frustration and inevitably will result in non-compliance.
To make it easier for users to engage with your program, consider learning how to create your own website to provide clear and accessible information about how the program works. With the right tools and platforms available today, you could set up a basic website or landing page to include a comprehensive list of FAQs on how the program will work.
3. Make employees feel empowered and give them options
A fitness reimbursement benefit shouldn’t come with a set plan or daily reminder.
Instead, you want to give your employees the opportunity to create their own fitness plan rather than forcing them into it.
Some employees might suggest an onsite gym, or gym equipment or others might prefer wearable device apps or a particular website that will help them stay active and fit.
There is a once-dated trend that’s making a huge comeback where staff members form their own sports clubs. This is another great cost-effective way to get them active and a great form of team building.
Is a fitness reimbursement program a taxable benefit?
Yes and no.
Most employer wellness programs are tax deductible, which means they’ll help you save federal tax money and state tax money. But there are those that are not.
For example, if you offer health insurance under a pre-tax plan, then an employee’s reimbursement will be a taxable benefit. This makes sense because the employee gets to pay lower taxes on their monthly paycheck and the company saves some taxes, too. 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.
Whether or not a fitness reimbursement benefit is taxable depends on your local laws and regulations.
What happens if an employee is unable to participate?
Remember, you don’t want your program dependent on obligations or expectations. The point of this is for employees to feel encouraged and motivated to participate without feeling pressured or obligated.
One way that you can help remove pressure from participation is by offering other resources such as advice from a health and wellness coach or on-call counseling and/or support groups if an individual needs it.
Conclusion
By offering a fitness reimbursement program, you are making a commitment to help your employees lead healthier lives and as an employer, this is an excellent way to show how much you value your staff.
Implementing a program that promotes transparency and accountability can go a long way in helping you and your employees achieve your wellness goals.
The employee who is accountable for the money will be more invested in improving her physical health. This ultimately improves employee engagement, which can help create new opportunities for growth and development within the workplace.