Health Plan Wellness Incentives are Taxable to Employees

The State of Wisconsin recently extended a number of financial incentives to employees through the Well Wisconsin employee wellness program. If you are covered under the State of Wisconsin Group Health Insurance program, you are eligible for a financial incentive to complete biometric testing and health risk assessment.  Depending on your health plan, you may also be eligible for financial reimbursements for wellness related expenses such as gym memberships, fitness classes, or the cost to participate in Community Support Agriculture (CSA) programs.  You can learn more information about the benefits available to you by accessing

Per guidance from the federal government and the Internal Revenue Service (IRS), these benefits are classified as taxable fringe benefits. This means that any financial incentive you receive from the program is taxable income for state and federal tax purposes.

What this means for you:

  • Beginning in 2014 financial incentives will be reported by your employer as a taxable wage and will be subject to applicable withholdings and taxes. You will see withholdings for all incentives issued in the current calendar year reflected on your December pay stub. This will include incentives issued to your eligible family members.
  • Withholding will include 7.65% for Social Security and Medicare and may include withholding for federal and state taxes, depending on the number of exemptions you claimed on your W-4.
  • Due to the year-end reporting, incentives normally paid during the months of November and December will be delayed until the next tax year.
  • Federal regulations requires the UW Service Center to receive financial data regarding incentives issued to employees and their covered family members. Your health information is protected by federal privacy regulations and is not shared with your employer.

Even with the federal government’s tax regulations, eligible employees are able to receive substantial financial rewards for using the wellness incentives offered by the State of Wisconsin and participating health plans. Benefits available through the Well Wisconsin program are also available to any dependent over the age of 18 who is covered by your State of Wisconsin insurance plan.

If you have any questions or concerns feel free to contact ETF at 1-877-533-5020 or our office at 465-2390.