HealthWorX Warns of Risks in Tax-Engineered Section 105(b) Healthcare Programs
HealthWorX, a proponent of the nonprofit-third-party administrator (TPA) model for employer-sponsored healthcare, has raised concerns about tax-engineered Section 105(b) reimbursement programs. These programs often disguise payroll deductions as 'tax-free' medical benefits without actual expenses being incurred by employees. The IRS has repeatedly challenged such arrangements through Chief Counsel memoranda, stating that cash wellness rewards and similar payments are taxable income when not tied to real unreimbursed medical costs. HealthWorX argues its nonprofit-TPA model offers a safer alternative focused on delivering genuine healthcare services rather than tax avoidance strategies. This approach emphasizes transparency, compliance, and expanding access for lower-income workers. The company claims it has successfully passed a U.S. Department of Labor audit, reinforcing the legitimacy of its operations. Dr. John Zabasky, CEO of WorXsiteHR (the TPA supporting HealthWorX), warns employers against relying on tax assumptions that contradict IRS guidance and highlights the risks associated with misrepresenting taxable compensation as medical reimbursement.
Topics: healthcare IRS guidance nonprofit-TPA model Section 105(b)