If you’ve every felt like your employee wellness program isn’t quite hitting the mark with your team, you’re not alone.

In fact, a surprising number of companies often find themselves offering wellness perks that, despite good intentions, end up feeling disconnected from what employees really need.

The truth is, employees today want more than a simple gym membership, a meditation app subscription, or some other one-size-fits-all wellness benefit. They want flexibility, personalization, and a program that truly aligns with their lives.

In 2025, it’s about giving your entire workforce the freedom to take charge of their own health and wellness. But how do you build a program that checks all those boxes?

That’s why we developed this guide to everything you need to know about today’s top employee and employer benefit: wellness stipends.

What is a wellness stipend?

First, a definition:

A wellness stipend is an employer-funded benefit that provides employees with a set amount of money to spend on their personal wellbeing.

Depending on how a company designs it, eligible expenses can include a wide range of wellness-related items and services from gym memberships to mental health apps, fitness subscriptions, wearable fitness trackers, and more.

Further details on what they are:

• They are sometimes also referred to as health stipends, wellness accounts, wellness allowances, wellbeing allowances, wellness spending accounts, wellness reimbursements, and wellness dollars.
• Employers decide how much to offer, and within what timeframes (such as a monthly, quarterly, semi-annual, or annual basis) employees have to spend.
• Depending on the type of wellness program an employer designs, it will determine what expenses are eligible, including physical, mental, or financial wellness needs. Some people use them to cover a fitness or gym reimbursement.
• They are taxable health benefits which means they have tax implications for either the employee or employer, as taxes can be grossed up by the employer or employees cover the taxes.

What they are not:

• Health Savings Account (HSA)
• Health Reimbursement Arrangement (HRA)
• Flexible Spending Accounts (FSA)
• A health insurance stipend
• A stipend that is reimbursed through a typical business expense software since these are taxable purchases and must be treated as such.

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Benefits of wellness stipends

If you don’t currently offer a health stipend to your employees, you might be wondering, “Why do employers offer wellness programs to their employees?”

Because wellness is no longer a nice-to-have — it’s an expectation.

KFF, an independent news source on health policy, reported that 84% of large employers (200 or more worker) offered a workplace wellness benefit in addition to their required health benefits.

The good news is that prioritizing your employees’ health and wellness doesn’t only benefit them — it also benefits you. Companies with programs supporting employee well-being have higher retention rates, productivity levels, and overall job satisfaction.

As an employer, your employees’ health and wellness have to be the top priorities. According to data from Personify Health’s 2024 Employee Health and Productivity Report:

• Two-thirds of employees struggle with work-life balance.
• 22% said poor social well-being negatively affected their job performance.
• 55% reported a decline in job performance because of financial health worries.
• And, sadly, only half of employees feel that their health and wellbeing programs are enough.

And when employers offer flexibility through stipends? Engagement, appreciation, and health outcomes skyrocket.

In Compt’s 2025 Annual Lifestyle Benefits Benchmark Report, Health & Wellness was the #1 most-used stipend category, showing that when you give people the freedom to define wellness for themselves, they actually use the benefit.

Benefits of Wellness Programs for Employees:

Employees are healthier and happier when wellness choices are offered

According to MetLife’s Annual US Employee Benefits Trends Study 2022, employees who are satisfied with their employer’s wellness programs are 1.6 times more likely to stay at their current jobs.

Stipends like the ones Compt offers puts the power of choice in your employees’ hands.

It supports them to choose what being ‘healthy’ means to them, and, more importantly, how they can achieve their own version of wellness.

For example, while some people may love hiking outdoors, others may prefer to do group fitness classes. And others might prefer a stretch session or new pair of running sneakers.

Stipends evolve alongside your people

Stipends offer personalization of the benefits, but they also adapt as your people evolve. How people get healthy might change over time, and especially as their lives and personal preferences change.

Think about it, do you have the same wellness goals or habits you did 10 years ago? Probably not. The same goes for your people.

Benefits of Wellness Programs for Employers:

Wellness stipends improve retention

Gallup recently reported the true cost of poor employee wellbeing, with 15% to 20% of total payroll in voluntary turnover costs, on average, due to burnout.

While providing stipends to employees may not be obligatory, the most successful companies are already onboard. They understand that it’s not about the monetary value of the stipend (but let’s be real, that part is pretty awesome), but rather the message it conveys: a genuine desire to support their peoples’ individual needs. This is precisely what attracts and retains top-tier talent.

Save company money and get more value on what they do spend

There are many ways that a stipend approach to wellness will save your company money.

First, according to the Centers for Disease Control and Prevention (CDC), workplace wellness programs that focus on prevention and health promotion lead to 25% savings each on absenteeism, health insurance costs, and workers’ compensation and disability management claims costs. These programs often include initiatives like health screenings, preventive care, fitness programs, and chronic disease management.

Additionally, leveraging the stipend approach will save money.

When employers select the specific perks for employees, employees aren’t likely to use them since it’s not what they’d prioritize or purchase given the opportunity to pick for themselves.

Wellness is so unique to each person and also changes throughout life, for one person health might mean meditation, to another it might mean a running club, and a third might prefer a family gym membership.

The best employee wellness benefits create a win-win: employees get to choose the perks that matter most to them, and companies avoid offering vendors that are overpaid and underutilized.

They’re the smarter, more strategic way to offer benefits today

The old way of administering health and wellness perks and benefits isn’t working anymore.

As the workplace has evolved, so have employees’ needs — and the old model of one-off point solution wellness benefits isn’t keeping up.

Without a flexible program that meets your people where they are in life, dollars are wasted and employees are left frustrated (and unsupported).  

That’s why we built Compt — to help companies offer more meaningful choice to their people, deliver greater value to the business, and do it all without increasing spend. And it’s working too. With Compt, customers get 18x more employee participation rates than traditional point solution wellness vendors.

Stipends are easier to manage and fully tax-compliant

Gone are the days of HR juggling various health and wellness vendors, on top of every other employee benefit vendor. The stipend approach empowers employees to take control so they can get exactly what they want (and with Compt, HR leaders manage the whole process in 30 minutes a month).

When evaluating lifestyle benefits software, prioritize solutions that are fully tax-compliant. This will not only win over your CFO and leadership team, but also save your HR team valuable time by eliminating manual spreadsheets, being prepared for tax-season and audits, and reducing the risk of costly errors.

15 companies offering wellness stipends today

Based on research, conversations, and market trends, one thing is clear:

The companies that achieve the most productivity and success are the ones that are most innovative, most focused on employees’ needs, and the most driven to help the employees succeed at work and in life.

Companies offering health & wellness stipends:

• Deloitte: a $1,00 annual wellness subsidy (recently doubled from $500 to $1,000)
• Salesforce: a $100 per month wellness benefit
• Facebook: $2,000 a year for health & wellness expenses
• Veeva Systems: annual $500 wellness stipend for gym memberships, fitness equipment, or mental wellness
• Duolingo: $70/month for remote employees to spend on gym & wellness reimbursements
• Quickbase: $200/month for a wellness account
• ButterflyMX: $300/quarterly for a self-care stipend
• RocketReach: $200/month quarterly wellness stipend
• Vouch: $80/month wellness reimbursement
• Signal Advisors: $1,200 annually for mental and physical well-being
• Alliant Credit Union: $35 monthly for wellness activities
• EY (Ernst & Young): Up to $1,000 annually; reimburses 75% of eligible expenses
• Lob: $125 monthly stipend to expense wellness purchases and programming like virtual yoga and meditation sessions
• CourseHero: $2,000 wellness stipend
• Mason: $100 monthly reimbursement for qualified fitness and wellness expenses

Find even more ways to use a wellness stipends from this post.

What expenses are reimbursable in a wellness stipend?

A common question people ask us is, “What expenses can be reimbursed under a wellness stipend, and what are they used for?”

You can reimburse a variety of wellness-related expenses that support an employees mental or physical health including:

• Gym or fitness memberships
• Personal trainer or training sessions
• Fitness classes (like yoga classes, Crossfit, or F45)
• Health & wellness coach
• Home exercise equipment like treadmills, yoga mats, weights, or foam rollers
• Wearable fitness trackers like Fitbits, Whoop, or the Oura ring
• Weight loss programs or nutrition classes
• Physical therapy sessions
• Chiropractic care
• Massage therapy
• Acupuncture sessions
• Health screenings or diagnostic tests not covered by insurance
• Healthy meal delivery services, or pre-made meals
• Fitness books or programs
• Counseling services
• Health coaching
• Healthy snacks and other food-related items like cookbooks, water bottles, or juicers
• Fitness and motivation programs, or mobile apps
• Mental health services & apps
• Meditation apps or courses
• Health supplements or herbal teas
• Aromatherapy oils or sprays
• Sleep improvements products or tracking apps
• Weighted blankets or blackout curtains for improved sleep
• Sound therapy or white noise machines
• Journals or guided-journaling tools/apps
• Breath-work or EFT tapping support
• Self-care items like eye masks, headache wraps, or infrared lights
• Smoking cessation programs
• Any other physical or mental expenses that you deep eligible for expense reimbursement

Here’s an even more comprehensive list of the different ways to use a wellness account at your company to improve employee wellness.

Real employee quotes about their impact

Below are real quotes and stories from Compt users highlighting the powerful impact their company’s wellness stipend has had on their lives. From supporting mental health and physical fitness goals to creating a stronger sense of personal agency, these stipends are more than just perks, they’re meaningful investments in employee wellbeing. Each story reflects how wellness reimbursements make people feel more supported.

• “I am able to buy a yoga punch pass. Yoga is my anti-depressant :)“
• “It has allowed me to participate in regular exercise programs that I normally would not have attended due to the cost.“
• “It is a huge relief to have help purchasing necessary medical device that is not covered by insurance.“
• “Compt helps me to make sure I always have time and money put aside for my health and wellbeing regardless of pay“
• “It has helped me do my light strength training and do exercises to benefit my circulation.“
• “I exercise regularly but this gives you extra motivation to go a little more!!“
• “Trying to get caught up on my medical expenses is very difficult. I pay almost $200 a month. The stipends do help out.“
• “I’m able to obtain protein shakes & supplements that contribute to my overall health, wellness and weight loss/maintenance.“
• “It encourages me to keep going to pilates which helps my body and spirit.”
• “I am acquiring a First Aid Certificate.“
• “It has enabled me to finally start losing weight!“
• “Without it, I wouldn’t have been able to afford a gym membership! Ty”
• “Just began using this for my yoga membership“
• “Thank you. I am able to afford a membership to the YMCA for my family“
• “It’s that extra little push to keep the wellness aspect of our lives moving forward.“
• “I was able to pay my co-payments for my Physical Therapy. Thank You“
• “Helps pay my medical bills”
• “I love being able to use my stipend to help cover my gym costs.”
• “It’s been helpful in buying running and/or tennis shoes for workouts.”
• “I regularly exercise at the gym with the help of of our Compt stipend.“
• “I use my chiropractor/massage vists for my reimbursements. To get assistance with these treatments is wonderful!“
• “Lightens the burden of paying for exercise – wonderful.“
• “I’ve been able to workout and enjoy life WAAAAAY more!“
• “My quarterly massage is very rewarding“
• “I have been able to use it toward my gym membership. I also got a walking pad, and these have helped my overall well-being.“
• “It has been great to be able to supplement my income for well-being for myself and to be reimbursed for fitness“
• “This extra financial support helps me stay healthy.“
• “My daily work requires a lot of physical activity, so I’m able to stay focused and physically active.“
• “I got myself a fitbit!“
• “I am struggling with sciatica pain and the benefit helps me pay for the chiropractor. Thank you!“

Compt’s reimbursement-first design provides structure and compliance which companies need without limiting employee choice, making it both flexible and compliant. And as the quotes above show, the impact goes far beyond process: it’s deeply human.

What we’re most proud of is how Compt’s model makes this kind of impact not just possible, but easy. A few of our favorite themes that we notice from the quotes above and what we hear from HR customers:

• Reimbursement makes previously out-of-reach options feel accessible and achievable.
• Employees are preventing burnout, injury, and illness, not just reacting to it.
• The reimbursement model provides true flexibility across medical, mental, and holistic wellness
• Compt isn’t just enabling behavior, it is reinforcing consistency.
• Our model centers the employee’s definition of wellbeing.
• Reimbursement isn’t just a transaction. It’s a signal of trust and respect.

With Compt, companies can move beyond generic one-size-fits-all approached and into something it’s personalized, appreciated, and lasting.

Inside one company’s wellness stipend

Below is an example of a health stipend from a real-life Compt customer.

Our customer gives their team members a $200/month wellness reimbursement to spend on items from gym memberships to workout gear to meditation apps to support a healthier lifestyle.

After analyzing their team’s stipend data, they noticed employees selected many different types of health perks (as seen below).

Their team bought 36 unique health & wellness-related perks, and signed up for memberships at 22 different gyms!

This is the magic of what happens when you offer your people a health and wellness stipend–employees can choose the vendors they want without burdening HR/finance.

Is a wellness stipend taxable?

Yes, health stipends are taxable benefits.

SHRM covered this topic in a piece titled, “IRS Reminds Employers: Wellness Incentives Are Taxable” and had this to say on the topic:

“The general rule states that any award or prize given by an employer is taxable to an employee as wage, to be included on their W-2 and subject to federal tax withholdings, as well as Social Security and Medicare taxes,” Robert Frutchey, CPA, a health benefits consultant with Brentwood, Tenn.-based Cowan, a benefits brokerage and consultancy, posted online.

Wellness stipends are typically considered taxable income by the IRS because they’re not classified as qualified, tax-free benefits under Section 213(d) or other pre-tax benefit rules.

This means that if you give your employees a $100 wellness stipend to cover a gym membership, meditation app, or alternative therapy session, the IRS views that $100 as additional income, just like wages or a bonus. And thus, it must be reported and taxed accordingly.

There are two ways companies can properly account for taxes, let’s look at an example.

Let’s say you gives a $100 monthly wellness stipend:

Because wellness stipends are taxable income, it’s important to pick a software solution that ensures taxes are accounted for and included in their regular paychecks, so employees don’t get hit with an unexpected tax bill down the line.

This is different from pre-tax benefits like health insurance premiums or HSA contributions, which are sheltered from taxes under specific guidelines.

There is an exception to the tax rules above that make these taxable awards nontaxable and that is:

The “de minimis award” rule. The IRS defines a “de minimis fringe” award “as any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer’s employees) so small as to make accounting for it unreasonable or administratively impracticable.” Which means a company provided gym membership is taxable, but providing employees a tee-shirt isn’t.

If you’re looking to offer your people a tax-compliant wellness stipend, a stipend reimbursement platform like Compt can help. With Compt, organizations create and manage every detail of their wellness stipend (or any stipend program). Schedule a call with a stipend expert today.

How to create a wellness stipend [with Compt]

With Compt’s intuitive employee stipend software, you can easily automate and streamline the entire process, reducing administrative burden and ensuring a seamless, hassle-free experience for both you and your team. Plus, Compt helps you stay compliant with tax regulations, ensuring that stipend payments are handled correctly and efficiently—giving you peace of mind and protecting your business from potential tax liabilities

Four steps to setting up a wellness stipend:

1. Name your stipend and add a description

When naming your stipend you can keep it simple, or get creative. From “Wellness Stipend” to “Feel Good Fund”, it’s totally up to you.

And, you don’t have to do it alone. Our top-rated Customer Success team has helped hundreds of HR professionals not only name their stipends, but design them from the big picture goals that align with your business and employee needs and budgets, down to the nitty gritty of naming and program descriptions.

2. Specify stipend amount per employee and timeframe

Do you want to offer this monthly, or do you prefer to offer it on a quarterly, semi-annual, or annual basis?

In our Annual Lifestyle Benchmark Report [2025], we found that stipends with a quarterly cadence tend to see the highest usage.

It’s ultimately up to you: if you’re unsure or need a little inspiration, check out the previous company examples section.

3. Identify which categories the stipend should cover

Your health and wellness stipend is designed to support your employees’ well-being, so you’ll definitely want to select the Wellness Category. However, many companies expand their offerings by adding categories like Food, Family, and Treat Yourself, allowing employees to define what ‘health’ means to them at different stages of life. These additional categories don’t increase your cost, but they provide more options for employees to support their holistic well-being.

If you want to make your monetary investment go even further, consider providing a Lifestyle Spending Account (LSA). With an LSA, you can include health and wellness alongside several other categories, giving employees the flexibility to choose benefits that best match their current needs whether that’s health, food, family, pets, student loan repayment, and more. By offering a wider variety of spending categories, an LSA empowers employees to direct funds toward the areas that are most important to them, providing the maximum level of personalization and holistic approach to lifestyle benefits and perks. Below we cover the other popular stipend categories we see at Compt, and any of those can be combined with a wellness stipend to become a Lifestyle Spending Account (LSA)

4. Lastly, invite your employees to spend their wellness funds.

Once they receive an invite and activate their account, they can begin spending based on your program’s start date.

Post the requisite information on your company’s internal wiki or other internal communication channel, and email notify them.

Other Types of Stipends

Wellness stipends aren’t the only type of stipend companies are offering these days. In fact, stipends are quickly becoming one of the most sought-after perks, showing up on nearly every “top perks” list.

So, what other stipends are gaining popularity? Here’s a breakdown of some of the most common:

• Cell phone reimbursement stipend
• Charitable giving
• Commuter stipend
• Equipment stipends
• Family stipends
• Internet stipend
• Learning & development stipend
• Meal or food stipends
• Pet care stipends
• Productivity stipends
• Remote work stipend
• Student loan assistance
• Travel & experience stipends
• Anniversary bonus
• Lifestyle Spending Account: Companies combine one or more of the stipends above together to create a general perk stipend that gives employees even more flexibility to choose what matters to them.

Offer Wellness, the Compt way

See why Compt customers get 18x more employee engagement rates than traditional point solution wellness vendors.

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Frequently Asked Questions (FAQ) on Health & Wellness Stipends

Is a wellness stipend taxable?

Yes, it is. Reimbursements for wellness programs are taxable and should be included in an employee’s gross income. This includes all items purchased through a stipend such as gym memberships, fertility support, supplements, wearable technologies, and more.

Is a wellness stipend considered a fringe benefit?

Yes, it is. Fringe benefits are lifestyle benefits, and include comprehensive wellness benefits like wellness stipends.

Does IRS consider stipends income?

Most employee stipends are considered taxable benefits. However, there are a few specific stipends, such as commuter or education benefits, which are tax-free up to the IRS-designated annual contribution limits. To do so, you must establish an accountable plan and follow IRS guidelines.

Are health stipends reported on w2?

The IRS explains that you must report stipends on your employees’ Form W-2 as taxable income, and you’ll also be required to withhold state and federal taxes.

Please Note: Compt software supports the categorization and proper reporting of benefits according to IRS guidelines, helping businesses maintain compliance. However, Compt cannot provide tax advice, and users should consult their own tax, legal, and accounting advisors when necessary.

Editor’s Note (May 2025): This guide was originally published in 2024 and has been comprehensively updated to reflect the latest best practices, data, and insights on wellness stipends.