There has been a recent spate of “programs” that tout wellness as a way of getting tax free money to employees. As with all such programs, they involve “double dipping” from a tax standpoint and are patently illegal. The IRS has now confirmed the following in IRS Chief Counsel Advice Memorandum 201622031 (issued April 14, 2016):
1) Cash rewards for participating in a wellness program are taxable
2) Gym memberships are not de minimis benefits and are taxable
3) Reimbursement of any premiums paid through a Cafeteria Plan are taxable
It’s the last one where program profiteers seem to lay claim, but it makes no sense – you can only deduct premiums once, and only in the amount for which you are responsible. If the employer gives you a refund for participating in a wellness program, it is the same situation as #1 above – and it is taxable. Beware news that is too good to be true…
