Workplace wellness programs are becoming an integral part of America’s public-health strategy, which aims to tackle an increase in chronic diseases among workers, according to the Centers for Disease Control and Prevention (CDC). Chronic disease is an issue that is not going away any time soon, with some predicting that chronic issues will cost $4.2 trillion in annual health care treatment by 2023. However, with tax exemptions and credits potentially up for grabs, many U.S. employers have now put in place comprehensive health-promotion programs within the workplace. These programs are working toward improving the health and well-being of workers, as well as increasing worker productivity and reaping higher returns on investment.
Implementing a sustainable health program can be rewarding, both intrinsically and monetarily. Based on the type of health program that you offer, you may be entitled to a tax benefit, either in the form of tax exemptions or tax credit. A tax write-off or exemption is an itemized deduction of an item’s value from your taxable income. In other words, it is an eligible expense that you can report on your income tax returns to decrease your taxable income. On the other hand, tax credit is a dollar-for-dollar reduction in your tax bill. For example, if you normally pay $8,000 in federal taxes every year, a credit for $2,000 would lower your bill to $6,000.
Possible Tax Write-Offs or Exemptions
Certain health initiatives within your workplace can lead to tax benefits. Try implementing one of the following:
- Cafeteria meals. You are entitled to tax exemptions if your company operates a cafeteria or provides food in a dining area within the company premises, as the IRS details. The cost of food and beverages provided is deductible, including the cost of maintaining the facilities. You can incorporate healthy lifestyle practices by providing your employees with healthy food options.
- Office functions. According to a report by the Houston Chronicle, you may deduct 100 percent of the costs for meals that you provide for office functions as long as you meet specific criteria. Try incorporating a healthy-lifestyle theme at your company’s annual parties. Instead of the usual fat- and salt-laden foods, try serving some delicious, healthy meals instead. Work with your caterer to find recipes that provide healthful benefits without losing taste. Provide per-serving calorie and fat information when available, so employees know what they’re eating. You may inspire your employees to try cooking healthy at home.
- Recreational activities. Are you worried about your employees’ activity level? One solution is a company outing. The cost of providing recreational or social activities, such as a Family Day gathering or a friendly sports competition for your employees, is deductible and is not subject to the general 50 percent limit for food and entertainment expenses as explained by the IRS. Plan a day with fun physical activities for all skill levels. You’ll get your employees up and moving and foster team spirit at the same time.
- Purchase of health equipment or service. Purchased items or services related to a wellness program can be tax deductible. You can write off this expense if you can get documentation from a qualified wellness provider that verifies the equipment is for use in the health program.
Opportunities for Tax Credit
According to the U.S. Workplace Wellness Alliance, ensuring that you have an established wellness program can qualify your business for a tax credit for up to 10 years, if it satisfies the following criteria:
- Raises health awareness.
- Encourages behavioral changes among members.
- Promotes employee participation with or without incentives.
Eligibility criteria for tax credit varies from state to state, so it’s best to refer to your state’s Department of Public Health for specifications.
You can consider incorporating a combination of the following healthy lifestyle initiatives in your wellness program to make it more sustainable:
- Healthy office lunches and snacks.
- Healthy-food prep demonstrations.
- Fresh-fruit delivery to your office.
- Fitness competition (decided by a stat such as miles walked or run).
- Health talks.
- Fitness classes.
A tax incentive is a sure way to encourage employers like you to adopt healthy lifestyle practices as a business strategy. In the long run, a sustainable wellness program is cost-effective, as it can save your company money in health care expenditure. Corporate Wellness Magazine maintains that a company can gain an average of $5.81 for every dollar invested in health-related programs. Undeniably, having a comprehensive and sustainable health program in place can help your business reap positive financial outcomes over the long term through higher productivity and lower health care costs.
Emmie Sahlan has a graduate degree in English and has been writing professionally for the past five years. Her niche areas are insurance, credit cards, personal finance and education.