Your employees' mental health is just as important as their physical health. But not every health insurance plan covers it. A stipend program is a simple and low-cost way to support them.
84% of workers say their job or workplace conditions have contributed to at least one mental health challenge. And the vast majority (92%) agree on one thing: working for an employer that values their emotional and psychological well-being is paramount.
When something is important to your employees, it should be important to you. Prioritizing employee health and well-being leads to a happier and more productive workforce, lower turnover and absenteeism rates, and better overall employee satisfaction.
The most straightforward way to do that? A stipend.
Here's what we'll cover in this guide:
First, a quick definition:
A mental health stipend is a fixed amount of money an employer gives their employees for mental wellness services and activities. They are a type of health and wellness stipend, a category which also includes physical and financial wellness benefits.
Most companies offer mental health stipends on a monthly basis, but some choose to issue them as an annual or quarterly lump sum. Employees can use this money for anything related to mental health care, including therapy sessions, meditation apps, yoga classes, and self-care activities.
You might also hear them called...
Stipends are similar to reimbursements — both involve the company covering a portion of their employees' expenses. However, stipends come with more flexibility and fewer rules. They're designed to give employees the flexibility to seek out mental healthcare on their own terms, making them the ultimate inclusive employee benefit.
Here's how a typical wellness stipend program works (as an employer):
Usually, companies offer somewhere in the ballpark of $50 to $250 per month, depending on the company's budget and employees' needs.
Mental wellness programs vary from one company to the next. The best way to promote employee well-being is to make yours as flexible and accommodating as possible.
That's the whole point of a stipend, isn't it?!
Here's a list of some commonly-covered services and activities:
Since physical and financial wellness are closely linked to mental health, some companies choose to allow employees to use their stipend for expenses like gym memberships, fitness classes, nutrition classes, or financial counseling services.
You can offer a mental health stipend as a standalone payment, a stipend/reimbursement hybrid model, or part of a larger employee wellness program.
Unlike traditional health benefits like health insurance or services offered through employee assistance programs (EAPs), a mental health stipend is a taxable benefit paid to employees. Taxable benefits treated as additional income and subject to standard payroll taxes.
This means that...
Any amount your employees forfeit from their stipend, WSA, or LSA is not taxable. For example, if you offer $100/month ($1,200/year in total) but an employee only uses 9 months of it, they'll only owe taxes on the $900 they used.
According to research from Amwell, more than half of employees either don't have access to mental health benefits or aren't sure if they do. 85% of those with access through their health plans don't use them. Roughly two-thirds say they'd use digital resources if they could access them through their employers.
Additional research shows that 42% of Americans who needed care in the last 12 months didn't receive it due to costs and other barriers.
The issue here is access. Health insurance coverage is notoriously complicated and often leaves employees feeling unsure of what they have access to. Providing a mental health stipend makes it easy for employees to access exactly the resources they need without worrying about what's in their network.
The primary reason companies choose to offer stipends? To support their employees' mental health and well-being.
And what comes along with that? A happier, healthier, and more engaged workforce.
A 2022 study from MetLife found holistically healthy employees are 79% likelier to show job satisfaction, 59% likelier to feel engaged at work, and 53% likelier to be productive.
According to the American Psychological Association's 2023 Work in America survey, nearly all (92%) of employees say working for an organization that supports their mental health is important to them.
In addition to the clear connection between poor mental well-being and declining engagement/job performance, the tangible (costly) impacts that follow shortly afterward are absenteeism and turnover.
In the short term, these employees take more time off for mental health issues or related physical symptoms. Long-term, they'll find an employer that supports their needs.
If you don't see mental health stipends as a way to save money, we don't blame you. But there's more to it than money coming out of your pocket. You have to consider the costs of not supporting your employees' mental and emotional health.
On average, absenteeism costs employers $3,600 per hourly worker and $2,660 per salaried employee every year. As for turnover, it can end up costing 6 to 9 months of an employee's salary, all things considered.
With a mental health stipend program, you can increase retention and engagement rates for a couple hundred dollars per month per employee (at most). By extension, you'll reduce the abovementioned costs. So, really, it's more of an investment than an expense.
We aren't just recommending mental health stipends because we sell stipend software. For the nation's best employers, supporting employee mental well-being is a no-brainer.
One employer's wellness programs will always differ from the next. How exactly you choose to promote your employees' mental and physical wellness will depend on your team's unique needs and interests.
But thanks to the versatility of stipends, you have a lot of room to get creative.
Here's a step-by-step guide to help you get started:
Before you implement any employee benefit, you want to make sure it aligns with what your employees are looking for. Otherwise, it won't be as impactful.
You can get a better understanding of your employees' needs through employee benefits surveys, focus groups, and one-on-one meetings. Ask them what types of resources they would find most helpful for managing their mental and physical health.
Once you have a good idea of what your employees need, consider which type(s) of stipends make sense for your company and budget.
You have two main options:
How exactly you choose to offer this benefit will depend on your current company-sponsored mental health resources.
If you already provide access to services like telehealth counseling, meditation app subscriptions, and corporate gym memberships, a general wellness stipend is probably enough. If you don't offer these benefits and your employees express significant interest, you'll want to address it head-on with a dedicated stipend.
Next, you'll need to consider how much you can realistically allocate to these stipends each month or quarter.
Most employers offer somewhere between $50 and $250. Any lower than that, and it isn't useful. Any higher, most employees won't take full advantage.
You may or may not have a larger health and wellness program. The great thing about stipends is there are fewer strings attached and they're easy to offer.
So, you can offer them to more of your valued team members.
In addition to your full-time salaried workers, you might extend a small stipend to:
Ultimately, your ability to compete in the talent market depends on how your health and wellness benefits stack up against other employers'.
Start by researching what benefits your industry competitors offer. Then, broaden your scope to look at companies outside your industry but similar in size, location, and employee demographics.
For more, check out our guide to creating an employee benefits benchmarking report.
Perhaps most importantly, your wellness stipend program needs to be easy to understand and execute. It'll just create back-office headache if it isn't. And nobody will enroll.
Stipend software is the starting point for an integrated approach. You can use it to:
That way, you can focus on getting your employees the resources they need without overcomplicating things.
There are more stipends than just a Mental Health Stipend.
So what are the other types of stipends or allowances?
Below is a list of the more common:
What HR leaders are saying about why they love using Compt for their stipends
“Prior to Compt, we offered a corporate gym membership with two local gyms. As we completed our annual benefits and perks analysis, we wanted to offer a broader stipend to support our global employee base. Compt helped us achieve that global reach and flexibility.”
People Operations Specialist, Nextdoor, Inc.