While the benefits of wellness programs have been well documented, little has been said about the drawbacks and hidden costs.
Here are three pitfalls to watch out for:
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 at another company may be a giant flop with your workforce.
2. Tough to administer alone
Most employers find that it’s more effective to outsource wellness. Three reasons:
- Experience. Outsourced vendors have the expertise. They’ve been there, done that — and vendors that’ve been around for a while know how get results.
- Employees’ trust. Many employees are more involved in wellness programs when there’s no fear their employer is looking over their shoulders.
- Legal protection. Outsourcing helps insulate you from later claims that the company fired an employee because of his or her health risks.
3. Tax problems
Some of the most popular incentives offered to employees in wellness plans (think subsidized gym memberships) are taxable as compensation.
If you offer wellness participants discounts on their premiums, the Internal Revenue Service (IRS) caps the incentive at 20% of the total cost of coverage. Beyond that, Payroll has to withhold taxes or you could run afoul of the IRS.
