Cash Reward for Wellness Plan Participation Is Taxable

Employers can’t exclude cash rewards, such as a gym membership, for wellness program participation from an employee’s gross income, the IRS said in an advice memorandum.

Reimbursing premiums that were paid to participate in a wellness program also aren’t excludable from an employee’s gross income, even if the payments were originally made through a cafeteria plan salary reduction, the Internal Revenue Service said in chief council advice memorandum 201622031, issued May 27.

These types of awards or reimbursements aren’t allowed because they don’t qualify as de minimis fringe benefits, the IRS said. De minimis fringe benefits are defined as ...