Wellness rewards received from my health insurance carrier

[kcs1228]

I can (and did) earn $300 in wellness rewards from my health insurance carrier in 2016.  I received this reward for completing four separate tasks.  I received a debit card with the $300 loaded to it that I can use at specific types of merchants (health and wellness oriented).  Do I need to include this in my income and if so, why didn't I get any tax forms (1099) for this?

[MinhT · Accepted solution]

Your wellness rewards are taxable. You'll need to report the amount as Other Reportable Income, even if you did not receive any form 1099-MISC.

To report this income in TurboTax, open your return and follow these steps:

• Click on Federal Taxes, then on Wages and Income
• Under All Income, locate the Less Common Income section
• Click Show more and click Start next to Miscellaneous Income at the bottom
• On the next page, click Start next to Other Reportable Income (see attached screenshot).

[Ella31]

The response above is not completely accurate. If the debit card is used only for qualified medical expenses (such as copays), the incentive credits applied to the card are not taxable income. However, if you receive cash incentives, or if you receive credits that can be spent on items or services that are not qualified medical expenses (such as gym memberships), then the funds are taxable income.

[Katej1213]

I have a similar scenario, but mine is a bit different. I get HSA wellness contributions directly from my health insurance company to my HSA (my company participates in UHC Motion). Do I have to include those HSA contributions from UHC as part of my income? 

I know I have to claim the contributions as my own (line 2) rather than employer contributions (line 9), but I’m not sure if have to include those specific contributions as income as well. 

[RobertB4444]

@Katej1213 Your insurance company is paying you to work out.  If you get paid to do a thing then it is taxable income.  The IRS expects you to report 100% of taxable income.

However, once you have entered this into TurboTax you should enter a corresponding deduction for a contribution to your HSA, rendering this income effectively tax free.

[Katej1213]

Okay, I just wanted to make sure because for some reason I thought I got tax benefits from the wellness contributions going straight from UHC Motion to my HSA (rather than receiving funds via gift card, etc.).

Which I guess I still am getting a benefit because even though I have to include those contributions in my income, I also get to claim them as personal contributions which amounts to a wash for my AGI rather than just having to claim the contributions as income. 

Thanks for your help!