5 Mistakes to Avoid with Gym Reimbursement Programs

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One of the most common workplace wellness programs employers have in place is a gym reimbursement program. Some programs are offered through carriers, while some are offered and funded by employers. These programs are a great idea in theory in that they provide employees with 1) a discount to a specific fitness facility, or 2) they provide reimbursement on membership fees as a way to offset the cost and incentivize employees to get and stay healthy by being physically active. Maybe both! Unfortunately, many times these programs are poorly executed or are not a right fit for the company. Does your company have an in-house gym reimbursement program, or are you considering launching one? In this weeks newsletter, we offer up 5 mistakes to avoid when building your gym reimbursement program. 

1. Using a paper-based system

What system are you using to keep track of your employees reimbursements? Sifting through paperwork is time consuming for HR pros whose expertise is needed in other high priority areas. Unless you’re willing to operate your gym reimbursement program on the ‘honesty system’, and take your employee’s word for it that they’ve either a) purchased a membership and b) have actually been attending the gym, then you’re going to need to ask them for receipts (more paperwork!). Consider working with a third party vendor to help streamline the process.

2.  Not integrating with payroll

Once you’ve trusted or verified that your employees have gone to the gym, it’s time to reimburse them for their memberships based on how you have laid out the program (a maximum monthly or yearly amount). Employers are left with the choice of either integrating the payments with their existing payroll provider, or spending time writing checks to employees. Managing this in a large organization can eat up HR staff’s time, and without a proper management system, mistakes may be more likely. 

3. Forgetting that gym reimbursements are considered taxable income
As a general rule, wellness incentives are subject to the same federal tax rules as any other employee rewards or prizes. Any wellness incentive that is not medical care is taxable, including gym or health club memberships (even if you’re paying the facility directly), or cash/cash equivalents (including gift cards of any amount). These amounts should be included in an employee gross income and taxed accordingly. Equally as important, remember to communicate that wellness program incentives are taxable to employees so that there are no surprises on their paystub. 

4. Limiting choices for physical activity

Employees like to exercise where and when it’s convenient for them. Some prefer to work out in a gym, some prefer group classes like dance exercise, rock climbing or boxing, and some prefer to workout at home using an app or their own personal fitness equipment. Having a corporate gym deal with a prestigious national gym sounds fancy, but it won’t change the fact that if your gym locations are not convenient (either by location or by style of preferred exercise) then employees aren’t going to use them. Instead, consider partnering with a vendor that has relationships with many different types of fitness facilities in different locations to improve employee engagement and utilization, or expand your program parameters to include all different types of physical activity to be inclusive of all employees who wish to utilize the benefit. With this said, renaming your program from ‘Gym Reimbursement Program’ to something more inclusive of additional activities, like Fitness Reimbursement Program, or Physical Activity Reimbursement Program, let’s employees know there is flexibility for participation.

5. Forcing Program Participation
Avoid creating a culture that pressures employees to get active, but one that rather motivates them to do so. While your gym reimbursement program likely is not asking for employee medical information, other parts of a wellness program may. Thus,  it’s worth noting that: Per the EEOC, all wellness programs that obtain medical information from employees must be voluntary to participate in, may not deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan; and may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.

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