All incentives paid to participants of the group health insurance programs are considered taxable income to the group health plan subscriber and are reported to your employer for tax purposes. Health information, including responses to the health assessment, are protected by federal law and will never be shared with your employer.
If you are covered under the State of Wisconsin Group Health Insurance program, you are eligible for a $150 incentive to complete a health screening and assessment. Depending on your health plan, you may also be eligible for financial reimbursements for wellness related expenses such as gym memberships, fitness classes, the cost to participate in Community Support Agriculture (CSA) programs and rewards for participating in health or wellness programs or challenges. You can learn more information about the benefits available to you through the StayWell website (https://wellwisconsin.staywell.com/).
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:
- Throughout 2017, 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 incentives issued in the current calendar year reflected on your earnings statement. This will include incentives issued to your eligible family members.
- If your incentive was already received, and you are paid on a bi-weekly basis, you will see the tax withholding on your August 31st paycheck. If your incentive was already received, and you are paid on a monthly basis, you will see the tax withholding on your September paycheck. The November earnings statements would include tax withholding for incentives issued through the October 20, 2017 deadline.
- 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.
- Federal regulations require the payroll 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.
- These taxable fringe amounts will be processed with the code: XHW (Tax Fr – Health/Wellness) earnings code.
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.
Please contact Human Resources at payrollandbenefits@uwgb.edu or ext. 2390 if you have any questions.