What is a wellness stipend

Are you looking to support your employees’ well-being but unsure where to start?

A wellness stipend can be a flexible and effective way to demonstrate your commitment to employee health and happiness, increasing retention rates, boosting morale, and improving utilization rates of your benefits program.

In this article, we’ll explore what a wellness stipend is, how it works, and some real-world examples to inspire your own program.

What is a wellness stipend?

A wellness stipend is an allowance given to employees to help pay for eligible physical and mental wellness expenses. It’s a taxable benefit paid to employees to cover healthy living and wellness-related expenses.

Wellness stipends empower employees to choose the wellness activities and services that best support their individual needs and preferences. By providing a fixed sum of money on a regular basis, employers can demonstrate their commitment to employee well-being while giving staff the flexibility to prioritize their own health.

Learn more about stipends by reading our blog what is a stipend. 

Examples of wellness stipends

• Ernst & Young’s generous annual stipend: Ernst & Young offers employees $1,000 per year to cover a wide range of wellness expenses, including home office equipment, fitness classes, meal delivery services, and more. This comprehensive approach recognizes their workforce's diverse needs and supports physical and mental well-being.
• Webflow’s monthly wellness allowance: Webflow provides employees with $200 per month through a wellness stipend platform. By offering a regular monthly allowance, Webflow ensures that employees can consistently invest in their well-being and make wellness an ongoing priority.
• Custom-tailored programs for unique needs: Many companies work with wellness stipend platforms to create custom programs that align with their company culture and employee preferences. By surveying staff and analyzing usage data, employers can continually refine their stipend offerings to maximize engagement and impact.

Want more information on setting up a customized wellness program for your employees?, <span class=“text-style-link text-color-blue” fs-mirrorclick-element=“trigger” role=“button”>Schedule a consultation</span> with one of our experts and to find the right stipend for your employees.

Types of wellness stipends

Wellness stipends come in various forms, each designed to support different aspects of employee well-being.

Here are some of the most common types of wellness stipends you might consider offering:

Fitness stipends

These stipends cover physical activity and exercise expenses, such as gym memberships, fitness classes, personal training sessions, and home workout equipment. 

Fitness stipends can also reimburse employees for wearable fitness trackers like smartwatches or activity monitors, encouraging them to stay active throughout the day. By providing a fitness stipend, you empower your team to prioritize their physical health and find the activities that best suit their interests and lifestyles.

Mental health stipends

Recognizing the importance of mental well-being, many companies offer stipends specifically for mental health services and resources. These stipends can cover the cost of therapy sessions, either in-person or through telehealth platforms, making it easier for employees to access the support they need.

Mental health stipends may also reimburse employees for mindfulness and meditation apps, stress management programs, or online cognitive-behavioral therapy courses. Investing in your team’s mental health can improve productivity, reduce absenteeism, and create a more positive work environment.

Nutrition stipends

Healthy eating is a key component of overall wellness, and nutrition stipends can help employees make better food choices. These stipends can cover the cost of meal delivery services that provide fresh, pre-portioned ingredients and recipes, making it easier for busy employees to cook nutritious meals at home.

Nutrition stipends may also reimburse employees for healthy eating programs, weight loss plans, or consultations with registered dietitians. By supporting your team’s nutritional well-being, you can help them maintain their energy levels, boost their immune systems, and reduce the risk of chronic health conditions.

Alternative therapy stipends

For employees who prefer holistic or complementary approaches to wellness, alternative therapy stipends can be a valuable benefit. These stipends can cover the cost of massage therapy sessions, which can help alleviate stress, reduce muscle tension, and improve overall relaxation.

Acupuncture treatments may also be covered under alternative therapy stipends. Some companies choose to include chiropractic care in their alternative therapy stipends, helping employees address issues like back pain, headaches, and poor posture. By offering an alternative therapy stipend, you acknowledge the diverse wellness needs of your team and provide them with the flexibility to choose the modalities that work best for them.

Financial health stipends

Financial stress can take a significant toll on employee well-being, affecting their mental health, productivity, and overall job satisfaction. Financial health stipends aim to alleviate this stress by providing employees with resources and support to manage their finances effectively.

These stipends can cover the cost of financial education workshops, where employees can learn about budgeting, saving, investing, and retirement planning. One-on-one financial coaching sessions with certified professionals may also be included, allowing employees to receive personalized guidance on their specific financial situations.

For employees burdened by student loan debt, financial health stipends can even contribute to their repayment efforts, helping them achieve greater financial stability and peace of mind. By prioritizing your team’s financial wellness, you demonstrate your commitment to their long-term success and well-being, both in and out of the workplace.

Benefits of offering a wellness stipend

Implementing a wellness stipend program can have a significant positive impact on your organization and employees. Here are some key benefits you can expect:

1. Improved employee health and well-being

A well-designed wellness stipend empowers your team to prioritize their physical and mental health. Employees can use their stipend to access services and resources that help them manage stress, prevent burnout, and maintain overall well-being. This support is particularly valuable in today’s fast-paced, high-pressure work environments, where taking care of oneself can often fall by the wayside.

2. Increased employee engagement and productivity

When employees feel supported in their well-being, they are more likely to be satisfied with their jobs and feel a sense of engagement and connection to their work. A recent MetLife study found that employees who are holistically healthy are 59% more likely to feel engaged and 53% more likely to be productive. Investing in your team’s wellness can lead to a more motivated, focused, and high-performing workforce.

Furthermore, supporting employee wellness can also have a tangible impact on your organization’s absenteeism. The U.S. Office of Personnel Management found that wellness programs in federal agencies led to lower healthcare costs and reduced absenteeism while increasing productivity. When your employees are healthier and more resilient, they are less likely to take unplanned days off or require expensive medical interventions.

3. Enhanced employee retention

A comprehensive wellness stipend can be a powerful tool for attracting and retaining the best employees. Offering a stipend demonstrates your commitment to your team’s well-being and sets you apart from other employers who may not prioritize employee wellness to the same extent. When your employees feel valued and supported, they are likelier to remain loyal to your organization.

How does a wellness stipend work?

A wellness stipend is a flexible benefit that allows you to support your employees’ well-being in a way that works for them.

Here’s how it typically works:

• Employers set a budget: You decide on a fixed amount of money to provide employees, whether it’s a monthly, quarterly, or annual allowance. This budget can vary based on your company’s resources and priorities, but it should be enough to make a meaningful impact on your employees’ wellness journey.
• Employees choose eligible expenses: Within the guidelines you set, employees have the freedom to use their stipend on the wellness activities and services that matter most to them. This could include fitness classes, gym memberships, mental health apps, nutrition programs, or alternative therapies like massage or acupuncture. The key is to offer a wide range of options that cater to diverse needs and preferences.
• Reimbursement or direct payment: There are two main ways to administer a wellness stipend: reimbursement or direct payment. With reimbursement, employees pay for their wellness expenses upfront and submit receipts for approval and reimbursement. Alternatively, you can provide a dedicated stipend card or platform that allows employees to pay for eligible expenses directly, eliminating the need for reimbursement paperwork.
• Taxable benefit considerations: Wellness stipends are generally considered taxable benefits, which means they are subject to income tax and other applicable taxes. As an employer, you have the option to gross up the stipend amount to cover the taxes on behalf of your employees, or you can leave it to employees to factor the taxes into their spending. It’s important to communicate the tax implications clearly to your team and work with your finance and legal departments to ensure compliance.

How to design a successful wellness stipend program

Identify employee wellness needs

Recognizing your employees as individuals with different backgrounds, life stages, and health requirements is key to a successful wellness stipend program. 

Rather than prescribing a one-size-fits-all solution, empower your team to select the wellness benefits that align with their unique needs and lifestyles. Conducting employee surveys and analyzing usage data can help you tailor your offerings to maximize engagement and impact.

Set your stipend budget

Evaluate your existing wellness programs and identify areas where you may be overspending on underutilized benefits. Consolidating these expenses into a flexible wellness stipend can help you allocate your budget more efficiently.

Consider the potential costs associated with implementing and managing your wellness stipend program, such as platform fees, payment processing, or additional HR resources. While these costs should be accounted for, a well-designed stipend program can often streamline administration and reduce overall expenses compared to managing multiple vendor relationships.

Moreover, when budgeting for your wellness stipend, keep in mind that not all employees may use their full allowance. This forfeiture can work in your favor, allowing you to stretch your benefits budget further. However, it’s important to strike a balance between offering a meaningful stipend amount and minimizing waste.

Select program goals

Defining clear, measurable goals for your wellness stipend program ensures that it aligns with your company’s values and priorities. Use the SMART framework to develop Specific, Measurable, Attainable, Relevant, and Time-bound objectives.

For example, you might aim to improve employee engagement scores by 10% within the first year of implementing your stipend or reduce absenteeism rates by 15% over the next two years. Regularly assess your progress against these goals and adjust your program as needed to maximize its impact.

Benchmark against competitors

In today’s competitive job market, a comprehensive wellness stipend can differentiate you from other employers and help you attract and retain top talent. Research the types of wellness benefits your competitors are offering and consider how your program compares.

Resources like Forma’s Lifestyle Spending Account Benchmarking report provide valuable insights into industry trends and best practices, allowing you to design a stipend program that positions you as an employer of choice.

Ensure accessibility and inclusivity

A truly effective wellness stipend program is one that meets the diverse needs of your entire workforce. Recognize that employees’ wellness priorities may vary based on factors such as age, gender, family status, and cultural background.

By offering a wide range of eligible expenses and allowing employees to choose the wellness activities that resonate with them, you create a more inclusive and accessible program. Regularly solicit feedback from your team to ensure that your stipend offerings remain relevant and impactful over time.

Communicate your program to employees

• Explain the mechanics: Clearly outline how your wellness stipend works, including the allowance amount, eligible expenses, and reimbursement process. Be transparent about any tax implications and provide guidance on how employees can make the most of their stipend.
• Emphasize the importance of wellness: When introducing your wellness stipend program, take the opportunity to reinforce your company’s commitment to employee well-being. Share the benefits of prioritizing physical and mental health, such as increased productivity, reduced stress, and improved overall quality of life. Encourage employees to view their stipend as an investment in their personal and professional growth.
• Provide ongoing support: Keep the conversation around wellness alive throughout the year by regularly sharing resources, success stories, and new offerings. Encourage employees to provide feedback on their experience with the stipend program and use this input to refine and improve your approach continually. By fostering a culture of open communication and support, you can maximize the impact of your wellness stipend and create a more engaged, resilient workforce.

What are the challenges in implementing a wellness stipend?

Implementing a wellness stipend program can bring significant benefits to your organization, but it’s important to be aware of potential challenges you may face along the way. Here are some common obstacles and strategies for overcoming them:

Adjusting company culture

A wellness stipend alone isn’t enough. While a stipend is a valuable tool for supporting employee well-being, it must be part of a larger culture of wellness within your organization. You need to take a holistic approach that addresses the root causes of stress and burnout, such as workload, management practices, and communication.

This means embedding wellness into your business practices, where you make employee well-being a priority in your decision-making and day-to-day operations. Encourage leaders to model healthy behaviors, such as taking regular breaks and disconnecting from work outside of business hours. Incorporate wellness goals into your performance management and recognition programs to reinforce their importance.

Encouraging employee participation

To maximize engagement, your wellness stipend offerings must be relevant to your employees’ diverse needs and preferences. To do this, tegularly survey your team to understand their wellness priorities and tailor your program accordingly. You need to ensure that all employees, regardless of location or role, have equal access to the stipend and its benefits.

On top of this, clearly explain the details of your wellness stipend program, including eligible expenses, reimbursement processes, and tax implications. Use multiple communication channels, such as email, intranet, and team meetings, to ensure that all employees are aware of the program and how to participate. Provide regular updates and reminders to keep wellness top of mind.

Encourage employees to prioritize their well-being by offering dedicated time for wellness activities during the workday. This could include flexible scheduling, longer lunch breaks, or designated “wellness hours” each week. Make sure that managers are trained to support their team members’ wellness efforts and create a culture where taking care of oneself is valued and celebrated.

Ensuring program sustainability

To ensure the long-term success of your wellness stipend program, establish clear metrics and regularly assess its impact. Track participation rates, employee feedback, and key health indicators, such as stress levels and absenteeism. Use this data to identify areas for improvement and make data-driven decisions about program enhancements.

Furthermore, as your workforce evolves and new wellness trends emerge, your stipend program must adapt to remain relevant and effective. Continuously gather employee feedback and stay attuned to industry best practices to ensure that your offerings remain competitive and impactful. Be open to experimenting with new ideas and iterating based on what works best for your unique organization.

Is a wellness stipend worth it?

Offering a wellness stipend can lead to improved physical health, mental well-being, and overall job satisfaction among your employees. When your team feels supported in their wellness journey, they are more likely to be engaged, productive, and committed to their work. A well-designed stipend program empowers employees to prioritize their health and happiness, leading to a more resilient and high-performing workforce.

On top of that, implementing a flexible wellness stipend demonstrates that you genuinely care about your employees’ individual needs and preferences. By providing a range of options and allowing employees to choose the wellness activities that resonate with them, you create a culture of trust and support. This authentic commitment to employee well-being can set you apart from other employers and help you attract and retain top talent in today’s competitive job market.

While offering a wellness stipend does require an initial investment, it can ultimately lead to cost savings for your organization. Wellness stipends can be a valuable addition to your employee benefits package, helping you consolidate multiple wellness initiatives into a single, streamlined program. By providing a flexible stipend, you can reduce administrative costs associated with managing multiple vendor relationships and reimbursement processes. Additionally, when employees are healthier and more engaged, you may see a reduction in healthcare costs and absenteeism over time.

Get started with Forma today

Forma understands the complexities of implementing a wellness stipend that truly meets the needs of your diverse workforce. With our expertise, we can streamline the process, ensuring your wellness program is both impactful and sustainable.

To discover how Forma can alleviate the challenges of setting up a successful wellness stipend, <span class=“text-style-link text-color-blue” fs-mirrorclick-element=“trigger” role=“button”>schedule a consultation</span> with one of our experts.

_{*This document is for informational purposes. Forma is not engaged in the practice of law. Nothing contained herein is intended as tax or legal advice nor to replace tax or legal advice from counsel. If you need tax or legal advice, please consult with counsel or a certified tax professional.}