While there’s no doubt wellness programs have their benefits, little has been made of their drawbacks and hidden costs.

Three pitfalls to watch out for in wellness programs:

1. You get what you pay for

By and large, the cost savings from a wellness program will be driven by how much you’re willing to spend. Generally, you get what you put into them — both in time and money.

In addition, the program has to be tailored to your specific needs. What works for one company may not be right for you.

2. Tough to administer in-house

Many employers find it’s more effective to outsource wellness. Two reasons:

• Employee trust. Many employees are more cooperative with a wellness program if they don’t fear their employer is watching their every move.
• Legal protection. Outsourcing helps insulate you from later claims that the company discriminated against or fired an employee specifically because of his or her health risks.

3. Tax trouble

Some of the most popular incentives offered to employees for living healthier lifestyles (e.g., partially paid gym memberships) are taxable as compensation.

If you offer wellness participants discounts on their health premiums, the Internal Revenue Service caps the incentive at 20% of the total cost of coverage. Anything beyond that has to be considered taxable income.

Tags: compensation, gym memberships, health premiums, internal revenue service, outsourcing, taxes, wellness programs