arrowThere 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…