Healthcare costs are rising every year, and employers are playing a key role in helping their employees lessen the financial burden. In fact, the cost of care has become so exorbitant in some instances that many employees today believe that having a good health benefits package is almost as important as having a good salary.

Companies today can use a good benefits package as a great recruitment and retention tool. At the same time, costs for employers are going up, too, which necessitates some creativity when it comes to building a benefits package.

Some companies are looking to stand out from their competition by offering extra perks such as health and wellness stipends. We’ll describe what those are here and how they work so you can decide whether it might be good for your company.

What are Stipends?

Health and wellness stipends are perks that employers can use as an extra benefit to their employees. It could be on top of a traditional employer-sponsored health plan, or it could be in place of it — depending on the company’s situation.

Stipends are designed to help employees lower their costs, whether that be to help them pay for premiums or to pay for any out-of-pocket expenses.

Unlike other similar benefits that aim to do the same thing, though, stipends are essentially cash that is given as an upfront amount to employees. It is part of their paycheck, on top of their normal wages.

Employers get to choose the amount of stipend to give to their employees, and then employees have the freedom to use the money however they see fit.

What Can Health Stipends Be Used For?

Health stipends are intended to be used for medical expenses. Again, this could go toward the cost of healthcare insurance premiums, or for any related out-of-pocket expenses that insurance doesn’t cover.

It could be used to pay for prescription medications, copays and patient responsibilities for visits to primary care doctors or specialists, and other out-of-pocket medical costs.

Health stipends can also be used toward premiums on health coverage that the employer doesn’t offer, including dental and vision insurance.

What Can Wellness Stipends Be Used For?

Wellness stipends are very similar to health stipends. They work the same way but are meant to cover other expenses that are more holistic in nature.

These are gaining in popularity today, and are sometimes even called wellness LSAs. Wellness stipends can cover a wide range of expenses that go above and beyond what a typical health stipend would cover.

Some examples include mobile apps for sleep tracking, meditation and fitness; gym memberships or fitness classes; wearable fitness devices, fitness equipment for your home or personal trainer services; health-centric meal delivery services; and other wellness products.

These stipends essentially help fill the gaps that traditional employer-sponsored health plans have as well as what health stipends don’t cover.

What are Some of the Advantages of Health and Wellness Stipends?

Health and wellness stipends are a great additional perk companies can offer to their employees. It serves as a solid recruitment and retention tool as a result.

Stipends are very flexible and give employees the freedom to spend the money how they wish, helping them to lower their healthcare costs. In addition, since these stipends are taxable, they can be offered to employees even if they receive premium tax credits from a healthcare exchange.

Not only that, but health and wellness stipends can be offered to other workers who don’t qualify for your employer-sponsored health benefits. This includes part-time workers as well as 1099 contractors.

What are Some of the Disadvantages of Health and Wellness Stipends?

As mentioned, health and wellness stipends are treated as taxable income. This means that both employees and employers will have to pay taxes on that money — unlike premiums in an employer-sponsored health benefits package, for example.

Stipends also don’t satisfy the employer mandate of the Affordable Care Act, which means employers can’t use health and wellness stipends as a replacement for health insurance if they have at least 50 full-time employees.

Employers also have less control over what employees spend health and wellness stipends on, since they can’t require receipts in most cases.

Let Beckham Ellis Insurance Group Help You Decide Whether Health and Wellness Stipends Are Good for You

Health and Wellness stipends can be a great added benefit that employers can use to attract and retain top talent. By giving employees extra money in their paychecks, you can help them reduce their out-of-pocket medical expenses.

At the same time, health and wellness stipends aren’t perfect for every company, and there are differences between the two that you need to understand.

Beckham Ellis Insurance Group can help you decide whether you should offer health and wellness benefits for your employees. If your business is in the Georgia or South Carolina region, contact us today to learn more.