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Robert Flow is a legal writer and content marketer who investigates leads and tracks down interesting stories.

In the modern age, as the cost of healthcare rises, employers more and more have to encourage employees to live healthier lifestyles. Offering free gym passes or incentivizing weight loss and healthy eating habits is more economical than covering the costs of employees with health problems that arise from unhealthy lifestyle choices. With this comes the need to file such programs in yearly taxes, this article discusses the recent memorandum released by the IRS that outlines which benefits, such as cash incentives, count as part of an employee’s gross income and which do not, such as free t-shirts.

Key Takeaways:

  • First, the memo confirmed that coverage in employer-provided wellness programs that provide medical care is generally not included
  • Second, it was made clear that any section 213(d) medical care provided by the program is excluded from the employee’s gross income
  • Third, any rewards, incentives or other benefits provided by the wellness program that are not medical care as defined by section 213(d) must be included in an employee’s gross income

“Workplace wellness programs cover a range of plans and strategies adopted by employers to counter rising healthcare costs by promoting healthier lifestyles and providing employees with preventive care.”