If your current wellness program isn’t quite landing with your team, you’re not alone. Employees report high stress and uneven wellbeing: in the Gallup report State of the Global Workplace 2025, 40% said they felt “stress a lot of the previous day,” and only one in three are thriving in life.
This isn’t a surprise. Companies often find themselves offering wellness perks that, despite good intentions, end up feeling disconnected from what employees really need.
The truth is, many 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.
Forward-thinking benefits leaders are responding. The 2025 Benefits Trends research from WTW shows employers are actively recalibrating programs to deliver more value amid cost pressure, and SHRM’s 2025 Benefits Survey confirms continued adoption of flexible benefits like wellness stipends and LSAs.
Health costs have also entered the conversation in a big way. The 2024 Employer Health Benefits Survey from KFF reported average family premiums at $25,572 (up 7% YoY), and Mercer projects a 6.5% employer cost increase in 2026 even after cost-management steps (and up to ~9% without them).
With the current state of the world, the winning strategy is to give your entire workforce the freedom to take charge of their own health and wellness, all while saving your company money. But how do you build a program that checks all those boxes?
We developed this guide to everything you need to know about today’s top employee and employer benefit: health and wellness stipends.
What is a health and wellness stipend?
First, a definition:
A health and wellness stipend is an employer-funded allowance that reimburses employees for eligible well-being expenses.
Depending on how a company designs their health and wellness stipend program, eligible expenses can include a wide range of wellness-related items and services, including gym memberships, mental health apps, fitness subscriptions, wearable fitness trackers, and more.
Further details on health and wellness stipend programs:
- They are sometimes also referred to as health stipends, wellness accounts, wellness allowances, well-being allowances, wellness spending accounts, wellness reimbursements, wellness wallets, and wellness dollars.
- Employers decide how much to offer and on what cadence (such as a monthly, quarterly, semiannual, or annual basis) employees can spend.
- The type of wellness program an employer designs will determine what expenses are eligible, including physical, mental, or financial wellness needs.
- They are taxable health benefits, which means they have tax implications for either the employee or employer (i.e., taxes will be covered by employees if not grossed up by the employer).
What they are not:
- Health Savings Account (HSA)
- Health Reimbursement Arrangement (HRA)
- Individual Coverage Health Reimbursement Arrangement (ICHRA)
- Flexible Spending Account (FSA)
- A health insurance stipend
- A stipend that is reimbursed through a typical business expense software
What is a wellness wallet?
A wellness wallet is a modern way to describe a flexible, employer-funded pool of money employees can use for wellness-related expenses. “Wallet” usually implies the benefit is managed in a digital platform (with guardrails like eligible categories, documentation requirements, and reporting) rather than as a single vendor perk.
In practice, a wellness wallet can be delivered in one of two ways:
- Reimbursement-based funding (employees submit a receipt and get reimbursed through payroll)
- A stored-value card or payment method (depending on the provider and how the program is structured — Compt does not recommend this model)
Either way, employers still define what’s eligible and how spending is documented.
Most employers use the term “wellness wallet” interchangeably with wellness stipend or a wellness allowance. The difference is typically branding and administration, not the intent: flexible, employee-driven well-being support.
What is a wellness account for employees?
A wellness account for employees is an employer-sponsored benefit that sets aside funds employees can use for eligible well-being expenses (like fitness, mental health, or other wellness categories defined by the employer).
Despite the word “account,” this is not the same thing as an HSA, FSA, or HRA. In most cases, wellness accounts are post-tax / taxable benefits because they reimburse personal wellness expenses that don’t qualify for pre-tax treatment. Employers define what’s eligible, how often funding is provided, and what documentation is required.
To discover which method of delivering wellness support would work best for your company, read our deep dive, “15 Best Lifestyle Spending Account Providers in 2026.”
Invest in employee well-being with a wellness stipend.
(Compt customers see 95% activation and 93% participation among active users!)
Overall benefits of health and 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.
Compt’s 2026 Annual Lifestyle Benefits Benchmark Report shows that all-inclusive Lifestyle Spending Accounts (LSAs) have become the default way employers run lifestyle benefits. In 2025, 64% of Compt customers offered an all-inclusive LSA, up 9% since 2024 — a clear shift toward consolidating scattered perks into one flexible program.
And 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. And CEOs agree. According to 2025 data from Wellhub, 58% of CEOs say well-being is critical to financial success.
As an employer, your employees’ health and wellness have to be the top priorities. According to 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 well-being programs are enough.
And when employers offer flexibility through stipends? Engagement, appreciation, and health outcomes skyrocket.
In Compt’s 2026 Annual Lifestyle Benefits Benchmark Report, health and wellness remains one of the top stipend categories: 37% of Compt customers offer it, and wellness is included in 99% of broader Lifestyle Spending Accounts (LSAs), which shows how often well-being is baked into modern flexible benefits design.
And structure changes outcomes. In the 2026 Annual Lifestyle Benefits Benchmark Report, standalone wellness stipends reach 70% utilization (employees spend $70 for every $100 allocated) with 85% participation. All-inclusive LSAs — which often include wellness as a default category — reach 89% utilization with 93% participation. The takeaway: consolidation doesn’t just simplify administration; it tends to drive higher engagement and stronger spend efficiency.
Employee benefits of health and wellness stipends
Employees are healthier and happier when wellness choices are offered.
According to the 2025 Global Benefits Trends Survey from WTW, companies that emphasize employee well-being see 25% higher retention and significantly greater engagement scores than those that don’t. Similarly, Gallup’s State of the Global Workplace 2025 found that employees who feel supported in their overall well-being are twice as likely to say they plan to stay with their employer for at least the next 12 months.
That’s why more employers are moving away from prescriptive wellness perks and toward flexible, personalized, employee-led programs.
Stipends like the ones Compt offers put the power of choice in your employees’ hands.
A dedicated health and wellness stipend supports them to choose what being “healthy” means to them, and, more importantly, how they can achieve their own version of wellness.
“If you get your health and wellness from gardening, meditating, or hiking … this means different things to different people.”
— Kevin Sullivan, Global Benefits Manager, Quickbase (a Compt customer)
Stipends evolve alongside your people.
Stipends offer benefits personalization and evolve alongside your people. How employees get healthy and stay well naturally changes over time as their lives and priorities shift.
From fertility to elder care, health and wellness stipends delivered through Compt LSAs flex with every stage of life and every market you hire in.
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.
Employer benefits of health and wellness stipends
Wellness stipends improve retention.
Gallup’s 2025 State of the Global Workplace report estimates that low engagement and poor well-being cost the global economy $8.9 trillion annually in lost productivity (roughly 9% of total global GDP). Burnout and disengagement are among the top drivers of that loss, showing just how directly employee well-being ties to business performance.
While providing stipends to employees may not be obligatory, the most successful companies are already on board. They understand it’s not just about the monetary value of the stipend (though, let’s be honest, that part is pretty awesome) — it’s about the message it sends: a genuine commitment to supporting each person’s unique needs.
That authenticity is what attracts and retains top-tier talent in today’s market.
Health and wellness stipends save you money and drive value and ROI.
There are many ways that a stipend approach to wellness can help your company save money, especially in a year when every budget line is under review (if not scrutiny).
Instead of maintaining multiple single-use vendor contracts for fitness, mindfulness, nutrition, and family perks like one-off fertility benefits, employers are future-proofing their benefits by consolidating into one Lifestyle Spending Account (LSA) or flexible wellness stipend. It’s a simple shift: cut 90% of what you’re offering, roll those dollars into a smaller, more inclusive stipend, and everyone wins.
Additionally, leveraging the stipend approach will save money.
When employers select specific perks for employees, employees aren’t likely to use them because they’d not what they’d prioritize or purchase given the opportunity to pick for themselves. Only 28% of employees surveyed by benefits broker NFP report making maximum use of perks and benefits because of “the misfit of benefits offered versus what is valued.”
Instead of chasing utilization across dozens of niche programs, an LSA or wellness stipend consolidates spend into one measurable, flexible framework. It eliminates duplicate vendors, streamlines reimbursements, and gives Finance one predictable, trackable line item.
That efficiency makes health and wellness stipends and LSAs a rare kind of budget win: saving money doesn’t have to mean cutting impact for your people.
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 the most innovative, most focused on employees’ needs, and most driven to help their employees succeed at work and in life.
Companies offering health and wellness stipends include:
| Company | Wellness stipend or benefit | Careers page |
|---|---|---|
| Deloitte | $1,000 annual wellness subsidy (recently doubled from $500) | Deloitte Careers |
| Microsoft | $1,500/year gym and wellness reimbursement | Microsoft Careers |
| Salesforce | $100/month wellness reimbursement for fitness, mindfulness, and self-care | Salesforce Careers |
| Meta (Facebook) | $2,000/year gym and wellness reimbursement | Meta Careers |
| EY (Ernst & Young) | Up to $1,000/year; reimburses 75% of eligible wellness expenses | EY Careers |
| Adobe | $600/year well-being reimbursement program | Adobe Careers |
| Veeva Systems | Up to $500/year wellness stipend for gym memberships, equipment, or mental wellness | Veeva Careers |
| Quickbase (Compt customer) | $1,250 annual wellness benefit | Quickbase Careers |
| ButterflyMX (Compt customer) | $300 quarterly “Feel Your Best” self-care stipend, equalized by currency | ButterflyMX Careers |
| Alliant Credit Union | $35/month for wellness activities | Alliant Careers |
| Lob | $125/month stipend for wellness purchases or virtual classes | Lob Careers |
| Signal Advisors | $1,200 annually for mental and physical well-being | Signal Advisors Careers |
| Fictiv (Compt customer) | Flexible stipend program for cell phone, internet, learning, team events, and work-from-home setup | Fictiv Careers |
| Carrot Fertility (Compt customer) | Productivity stipend for coffee, dog walker, or fitness membership; spot bonuses for holidays | Carrot Careers |
| Adobe | $600/year well-being reimbursement program | Adobe Careers |
Which 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 employee’s mental or physical health, including:
- Gym or fitness memberships
- Personal trainer or training sessions
- Fitness classes (e.g., yoga, kickboxing, CrossFit, F45)
- Health and wellness coach
- Home exercise equipment (e.g., treadmills, yoga mats, weights, foam rollers)
- Wearable fitness trackers (e.g., Fitbit, Whoop, 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 (e.g., cookbooks, water bottles, juicers)
- GLP-1 weight-loss prescriptions
- Fitness and motivation programs or mobile apps
- Mental health services and apps
- Meditation apps or courses
- Health supplements or herbal teas
- Aromatherapy oils or sprays
- Sleep improvement 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 (e.g., eye masks, headache wraps, infrared lights)
- Smoking cessation programs
- Any other physical or mental expenses that you deem eligible for expense reimbursement
Learn more about ways to use a wellness stipend in this post, or, if you’re ready, request a demo with Compt.
Groceries as a wellness benefit
Groceries have become one of the most flexible and impactful ways employees use their health and wellness stipends. As food prices outpace both wages and public assistance programs, nutritious meals have become harder for many households to afford consistently. Expanding wellness stipends to include groceries acknowledges that well-being starts with access to healthy food, not just gym memberships or fitness apps.
Food benefits have also evolved quickly. While only a small percentage of employers offer food as a standalone stipend, it ranks as the top category paired with wellness stipends and appears in more than 90% of Lifestyle Spending Accounts (LSAs). This reflects a broader definition of wellness: one that recognizes that balanced meals and grocery essentials contribute as much to overall health as exercise or mindfulness programs.
Food benefits have evolved quickly as employers broaden what ‘wellness’ can include. In Compt’s 2026 Annual Lifestyle Benefits Benchmark Report, food stipend funding ranges from $160 to $5,020 per employee per year, with a median of $480 — a useful planning benchmark for teams that want to offer practical, everyday support without overengineering the program.
Employee behavior reinforces why this matters: nearly 1 in 10 stipend dollars is now spent at grocery retailers, and grocery/household essentials vendors show up repeatedly among top spend destinations.
Broadening health and wellness stipend eligibility to include groceries helps employers make wellness benefits more inclusive, practical, and relevant to the realities employees face today.
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 well-being. 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 work out 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. This makes 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. Here are 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 well-being.
- 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 approaches and into something that’s personalized, appreciated, and lasting.
Inside one company’s health and wellness stipend
Below is an example of a health and wellness stipend from a real-life Compt customer.
Our customer gives their team members a $200/month wellness reimbursement 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 and 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 and wellness stipends are a taxable benefit.
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
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 featuring a $100 monthly health and wellness stipend:
| Scenario | What your employees see | What happens |
|---|---|---|
| Employees cover the taxes | They receive ~$70-$80 | The rest is withheld for taxes |
| Employer grosses-up | They receive the full $100 | Employer pays the taxes |
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. Learn more in our guide to taxable and nontaxable fringe benefits.
There is an exception to the tax rules above that make some 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.”
— IRC Section 132(e)
Which means a company-provided gym membership is taxable, but giving employees a branded pen isn’t.
If you’re looking to offer your people a tax-compliant wellness stipend, a stipend reimbursement platform like Compt is an ideal choice. 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. Whether “Wellness Stipend,” “Feel Good Fund,” or something else, 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 — all the way from the big-picture goals that align with your business and employee needs and budgets 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, semiannual, or annual basis?
Quarterly funding has become the default operating cadence for all-inclusive LSAs. According to Compt’s annual benchmarking, 78% of LSAs were funded quarterly, reflecting how employers balance employee planning with predictable budget control.
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 and 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, caregiving, 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 a holistic approach to lifestyle benefits and perks.
Below we cover the other popular stipend categories we see at Compt. Any of those can be combined with a health and 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 send an email to notify them. A robust internal communications plan will help your program realize success from the very beginning.
If you’d like additional best practices and guidance on designing a wellness stipend, we’ve got you covered.
Other types of stipends Compt offers
Health and 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:
- AI tools stipend
- Cell phone reimbursement stipend
- Charitable giving
- Commuter stipend
- Equipment stipend
- Family stipends
- Internet stipend
- Learning and development stipend
- Meal or food stipend
- Pet care stipend
- Productivity stipend
- Remote work stipend
- Student loan assistance
- Swag stipend
- Travel and experience stipends
- Tuition reimbursement stipend
- 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 3x more employee participation rates than traditional point-solution wellness vendors.
Next up: Schedule a demo with Compt
Burnout and costs are both climbing, and you’re being told to cut wellness programs or justify every dollar spent.
Not long ago, your wellness perks worked well. Employees appreciated them. Leadership supported them. But the world has shifted; expectations changed, business outlooks evolved, and now those once-loved perks are going unused and are on the budget chopping block. You’re left trying to make outdated programs prove modern impact.
A wellness stipend changes that. Your team chooses what supports their health — whether that’s gym reimbursements, running shoes, or wearable tech. You get full visibility into what’s working, can prove ROI with real-time reporting, and finally offer a benefit employees actually use.
Replace or consolidate multiple wellness vendors into one stipend that drives 90%+ engagement and makes every dollar count.
FAQ: Health and wellness stipends
What is a wellness wallet?
A wellness wallet is an employer-funded pool of money employees can use for eligible wellness expenses. It’s often used as a modern label for a wellness stipend or wellness allowance, usually administered through a platform that supports categories, receipt requirements, and reporting.
Depending on the program design, employees may be reimbursed after submitting documentation or use a provider’s payment method, but the core idea stays the same: flexible wellness spending within employer-defined rules.
What is a wellness account for employees?
A wellness account for employees is an employer-sponsored benefit that provides funds employees can use for eligible well-being expenses based on the employer’s policy. It’s typically not a pre-tax medical account like an HSA or FSA.
In most cases, wellness accounts are treated as taxable, post-tax benefits, with expenses reimbursed and reported through payroll based on the program’s rules and documentation.
Is a wellness stipend considered a fringe benefit?
Yes. A wellness stipend is generally treated as a fringe benefit because it’s employer-provided compensation outside base wages, typically delivered as a taxable reimbursement.
Does IRS consider stipends income?
In most cases, yes — stipends are treated as taxable compensation because they reimburse personal expenses. However, there are a few specific stipends, such as commuter or education benefits, that 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 W-2?
Yes. When a stipend is taxable, it’s typically reported on the employee’s Form W-2 as wages and is subject to state and federal tax withholding.
Is a wellness stipend taxable?
Yes. In most cases, health and wellness stipends are considered taxable fringe benefits under IRS rules because they reimburse personal expenses. Compt automatically categorizes and reports taxable reimbursements through payroll, saving HR teams the manual tracking. For a deeper dive, see our guide to taxable vs. nontaxable fringe benefits.
Do wellness stipends affect HSA or FSA eligibility?
Not if they’re post-tax. Because wellness stipends are considered taxable, they don’t interfere with pre-tax health accounts like HSAs or FSAs. Compt’s categorization ensures reimbursable expenses stay distinct from pre-tax medical benefits; this assumes the stipend is post-tax and not structured as medical reimbursement.
Can wellness stipends be paired with an ICHRA?
Yes. Employers can use a post-tax wellness stipend or LSA alongside an Individual Coverage Health Reimbursement Arrangement (ICHRA) to cover non-medical or lifestyle expenses without affecting HSA eligibility. This pairing is increasingly popular for organizations moving away from group health plans but wanting to preserve holistic support.
How can we avoid ERISA issues with a wellness stipend?
Many employers reduce ERISA risk by designing wellness stipends as post-tax, taxable benefits and avoiding reimbursement of medical expenses that would make the program resemble a group health plan. If a company wants to support medical expenses, it’s best to work with legal counsel on plan design and consider pairing with a compliant health benefit structure (such as an ICHRA) rather than treating medical reimbursements as a casual wellness perk.
Always confirm plan design with your benefits counsel, because ERISA risk depends on how the program is structured and communicated.
Which expenses are reimbursable in a wellness stipend?
Most wellness stipends reimburse expenses that support an employee’s physical, mental, or holistic well-being, based on the employer’s policy.
Common examples include: fitness (gym memberships, classes, equipment), mental well-being (therapy, coaching, meditation apps), and nutrition/sleep support (meal programs, sleep tools).
Because wellness stipends are policy-based, the exact list depends on how the program is designed and what documentation is required. See the full list above for examples.
Can employees use wellness stipends for GLP-1 medications or weight-management programs?
Yes, if structured correctly. GLP-1s such as Wegovy, Zepbound, and Ozempic can be covered under a taxable stipend when categorized as part of a broader health and wellness benefit. Because they’re medical in nature, employers must ensure these reimbursements remain post-tax to stay compliant with IRS and ERISA rules. Compt helps classify these expenses automatically, so Finance and HR don’t need to manually flag them.
How do wellness stipends compare to Lifestyle Spending Accounts (LSAs)?
A wellness stipend focuses solely on health and well-being, while an LSA can include up to 28 customizable categories (e.g., family, food, learning, travel, recognition, swag, etc.). Many companies start with a wellness stipend and later consolidate multiple perks into an LSA for simplicity, compliance, and higher ROI.
What’s the average participation rate for wellness stipends?
In 2025, Compt customers saw 95% activation and 93% participation among active users, compared to just 28% of employees (per NFP) who say they fully use their employer’s benefits. The difference comes from flexibility; employees engage more when benefits actually fit their lives.
How do you calculate the right budget for wellness stipends?
Start by setting a realistic baseline. Most employers budget $15–$100 per month per employee, or $180–$3,000 annually depending on company size and total rewards philosophy. Use your engagement goals and benchmark utilization data (Compt customers commonly land in the ~60–85% range, depending on cadence and design) to model lifestyle benefits ROI. Even a small stipend can drive strong participation when paired with flexible, inclusive categories.
See our guide to designing health and wellness stipends for more details.
How do wellness stipends help during budget cuts or benefit reductions?
Wellness stipends or LSAs are a budget-conscious alternative to maintaining multiple vendor contracts. By consolidating underused perks into a single stipend or LSA, companies reduce overhead and vendor costs while maintaining inclusivity and choice. It’s a win-win-win: Finance gets predictability, HR keeps flexibility, and employees keep access to meaningful benefits.
How can HR measure ROI on wellness stipends?
Start by tracking utilization, participation, and feedback. Compt provides real-time dashboards showing category usage and trends over time. You can link these to retention, productivity, or engagement scores to quantify lifestyle benefits ROI and to prove that flexible benefits drive measurable business impact.
How should we communicate wellness stipends to employees? What are best practices for rolling out a lifestyle stipend, like health and wellness?
Effective internal communication will determine your stipend or LSA program’s success. Announce the benefit early and often. Use email, Slack, or intranet posts to explain eligibility and examples of approved expenses. Compt customers often add reminders in Slack or run mini campaigns around “How will you use your stipend this quarter?” to drive engagement.
How to offer a wellness stipend to employees? What are steps to launch a wellness stipend in 30 days?
Compt makes it easy to launch a health and wellness stipend in less than 30 days.
You’ll work with your Customer Success Manager to:
Name and describe your stipend. Define your goal — retention, engagement, or consolidation — then choose a clear name to set the tone.
Set your budget and cadence. Decide how much to offer and how often. In our 2026 benchmarking, Compt found that 78% of LSAs are funded quarterly for higher utilization and easier management.
Choose categories and configure in Compt. Start with Wellness or bundle it into a Lifestyle Spending Account (LSA) for added flexibility. Sync eligibility and payroll, test reimbursements, and confirm compliance.
Invite employees and communicate the launch. Announce details in Slack or email, share examples of approved expenses, and celebrate first reimbursements to build excitement.
Most Compt customers complete setup in under an hour and go live within 30 days (many in two weeks or less!).
Do wellness stipends work globally?
Yes. Many global organizations use Compt to manage stipends across currencies and tax jurisdictions. Programs can be localized by country or region — for example, setting the same buying power across currencies, as ButterflyMX does with its global stipend — to ensure fairness and compliance worldwide.
Can I use Compt to offer a wellness stipend?
Yes! Compt makes it simple to design, launch, and manage a fully tax-compliant wellness stipend program. You set the program parameters — including the amount to offer, set the timeframe for spending (monthly, quarterly, semiannually, or annually), and define eligible categories — wellness-only or bundled with other categories like food or family. Employees then have the flexibility to choose what wellness means to them whether that’s a gym membership, a meditation app, new running shoes, or a healthier meal service.
Unlike traditional vendor-based wellness programs, Compt keeps wellness spending flexible for employees while giving HR and Finance clear rules, documentation, and audit-ready reporting. HR teams save hours of admin work, finance gets clean reporting, and employees feel supported with benefits they’ll actually use. That’s why Compt customers see participation rates as high as 93% (3x higher than traditional point solutions).
With Compt, you’re offering wellness, and you’re also able to consolidate recognition, tuition reimbursement, swag, and more into one streamlined platform. That means HR manages everything in about 30 minutes a month, finance gets clean, audit-ready reporting, and employees get benefits they’ll actually use.
It’s why we’re trusted by companies in all 50 states and 70+ countries and earns customer satisfaction scores above 95%.
Request a demo to see how easy it is to launch a wellness stipend with Compt.
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: Originally published in 2024, this post has been recently updated for clarity and relevance for our readers.
