How To Maximize Benefits Savings Using a Personal Wellness Spending Account

Employee wellness benefits positively impact other areas of your business. Research shows that by investing $1 in a wellness area like mental health, employers can save $2-4 on other expenses, including healthcare costs. 

Personal spending accounts are one way to package health and wellness benefits, specifically for wellness-related expenses. They're versatile, inclusive, and ensure that every dollar the business spends on benefits is used by the employee. 

This guide will introduce you to the concept of a personal wellness spending account and how it maximizes the value of your benefits. 

What is a wellness spending account? (WSA)

A wellness spending account is a flexible employer-funded benefit plan that allows employees to access a wide range of health and well-being perks that meet their needs. 

Typically, the employer funds the WSA monthly, and employees make related wellness purchases. 

Example: Sandra, a 30-year-old employee trying to conceive a baby, uses her WSA funds for complementary acupuncture treatments. Meanwhile, a 55-year-old employee, Bobby, puts his allowance toward his golf membership. 

What do personal wellness account benefits cover?

A personal wellness account is entirely customizable, making it a truly inclusive benefit for every individual in your organization. Employers can set them up to include anything that enhances their employees’ overall well-being. To ensure their workforce uses the funds as intended, employers can define specific eligible expenses for their benefits package. These might include:

• Physical health and fitness 
• Mental health support 
• Nutrition and meals 
• Complementary therapies 
• Wellness treatments 

Are personal wellness spending accounts a taxable benefit?

Personal wellness spending accounts are a post-tax benefit for employees. However, employees will only pay income tax on the account funds they spend. This amount will be added onto the employee’s total taxable income. 

We recommend you consult a tax professional to advise on the latest IRS regulations for employee fringe benefits. 

How to determine eligible wellness expenses

Here are some common personal spending account categories, including the specific wellness-related expenses you could offer. There’s no need to add everything below; simply choose a selection based on your employees’ preferences and the specific health habits you want to encourage: 

Physical health and fitness costs

• Gym memberships and fitness classes
• Yoga classes
• Personal training sessions 
• Fitness equipment, such as running shoes, clothing, home cardio equipment, golf clubs, etc. 

Mental health well-being services

• Online talk therapy
• Meditation programs
• Workshops and seminars
• Stress management courses

Nutrition and meals 

• Nutritional counseling
• Meal delivery services
• Health food store purchases
• Cooking classes and meal prep services 

Complementary therapies 

• Acupuncture or reflexology treatments 
• Reiki sessions
• Chiropractic adjustments 
• Naturopathic consultations 

Wellness treatments 

• Spa treatments such as massages, facials, and manicures
• Wellness retreats or trips 
• Mindfulness courses 

Maximize the value of your benefits with a personal spending account

Since your WSA allows employees to access an enormous assortment of benefits, you’d be forgiven for assuming that this route could be expensive for everyone involved. The opposite is true. 

Employers save money 

Employers often use a variety of point solutions to provide employee perks and benefits. For example, a company might partner with ClassPass to deliver a fitness benefit and DoorDash to provide a food benefit. With a WSA, companies can instead use one account for a wide range of expenses, saving them on the costs and fees of deploying additional point solutions each time they want to offer a new benefit.  

Employees only pay tax on what they spend 

Unfortunately, personal wellness spending accounts are generally taxable for employees. Unlike a Health Savings Account, Health Reimbursement Arrangement, or Flexible Spending Account, which all result in less payroll tax, a WSA is considered taxable income, according to the IRS. 

Example: Employees who receive a personal wellness spending allowance of $100 per month will pay tax on this. However, if they only spend $80 of their allowance each month, and the rest is either unused or returned to the employer, they won’t pay anything on the $20 difference. 

How to track and monitor your spending

Maximizing the value of your personal health spending account requires you to monitor employee participation and spending. Gather detailed information over the course of your plan year to understand its impact on your employees and your company expenditure. 

• Budgeting tools: Use financial software or apps to track your spending and stay within your allocated budget. 
• Regular expense reports: Set up regular reports that monitor employee usage of their personal wellness accounts. This information also enables you to adjust contributions for the following year. 
• Employee feedback: Survey employees about their experience using their personal health spending account and gather suggestions for future improvements.

For best results, track specific metrics that align with your overall business goals for your WSA plan. 

Example: If your goal is to improve your employees’ access to mental health resources, track the number of workers using their accounts for mental health services. 

Set up a personal spending account with Benepass

Benepass is a modern, flexible platform that supports companies in distributing personalized benefits to employees. We offer a Lifestyle Spending Account that can incorporate a wide range of health and wellness-related expenses according to your goals and company culture. 

Benepass is rated 4.9 out of 5 with the G2 software community and has achieved a wealth of positive results for clients, such as the following: 

• Fintech company Mercury achieved a 92% engagement rate after rolling out a flexible wellness stipend program.
• Development company OcV!BE used our LSA to reduce the administrative burden of distributing flexible benefits. 
• SaaS company Mindbody has given its employees more choice with how they spend their benefits dollars. 

Ready to commit to your employees’ overall health and wellness? Take a free Benepass demo to see our lifestyle spending accounts in action, or contact sales@getbenepass.com to connect with a benefits specialist.