Aside from the requirement for a standards-based program that you keep rewards to no more than 30 percent of the employee-only premium, you may implement rewards as you see fit. Studies have shown that employees are most motivated by gift cards, insurance premium reductions and cash awards in wellness programs.
Any fringe benefit you provide is taxable and must be included in the employee’s pay unless the law specifically excludes it. A de minimis benefit is any property or service you provide to an employee that has so little value that accounting for it would be unreasonable or administratively impracticable. Items of de minimis value could include a badge, coffee, doughnuts or a company pen, for example.
Cash and cash equivalent fringe benefits (for example, a gift card or savings bond) — no matter how small the amount — are never excludable as a de minimis benefit and are always taxable. Non-cash awards that are not of de minimis value generally must be included as income at their fair market value. Fair market value is considered the amount an employee would have to pay a third party for the benefit.
