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There is not enough public, independently verified evidence to conclude that HealthWorX is safer or cheaper for employers. HealthWorX describes a nonprofit–third-party administrator model, but its compliance and savings claims need to be checked against the current plan documents, contracts, costs, and applicable rules. The key legal distinction is not whether a plan mentions section 105(b); it is how the arrangement is structured and operates.
What does section 105(b) mean for an employer health plan?
Section 105(b) of the Internal Revenue Code can exclude qualifying employer reimbursements for medical care from an employee’s gross income. That tax rule does not, by itself, establish that an arrangement satisfies the Affordable Care Act (ACA), ERISA, or other requirements. Employers need to identify the actual arrangement and assess its terms, rather than rely on a label such as “105(b) plan.”
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The IRS says an employer payment plan generally includes an arrangement in which an employer reimburses employees for some or all of their individual health-insurance premiums. Under Notice 2013-54, these arrangements are generally treated as group health plans subject to ACA market reforms, and they generally cannot be integrated with individual policies to meet those reforms. The IRS describes a potential section 4980D excise tax of $100 per day per applicable employee, or $36,500 per employee per year, for the noncompliant fact pattern discussed on its page; that is not a universal penalty for every arrangement referencing section 105(b). IRS guidance on employer health care arrangements
The Department of Labor (DOL) addressed a particular vendor model in 2015: an employer cancels its group coverage, establishes a section 105 reimbursement plan, helps employees select individual policies, and allows eligible employees to seek Marketplace credits. Asked whether that described arrangement was permissible, DOL answered “No.” It said the arrangement was a group health plan, participating employees were ineligible for premium tax credits or cost-sharing reductions while enrolled, and ACA market-reform failures could trigger section 4980D taxes. That answer applies to the described fact pattern, not automatically to every arrangement that uses section 105(b) or to HealthWorX specifically. DOL ACA FAQ, Part XXII, Q3
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What does HealthWorX say it provides, and what is established?
In a September 3, 2026 company-distributed release, HealthWorX describes a nonprofit–third-party administrator model. It says a mission-driven nonprofit supports healthcare access while a third-party administrator manages enrollment, eligibility, plan operations, participant support, provider access, claims processing, and compliance. The company also distinguishes its approach from arrangements it characterizes as returning payroll deductions as purportedly tax-free cash. These are company descriptions, not independent verification of the legal treatment, services delivered, or results for a particular employer. HealthWorX release, September 3, 2026
A July 28, 2026 release emphasizes that the model requires operating infrastructure, not just plan documents or a benefits announcement. That is a relevant implementation point, but the release does not provide independently audited performance measures. HealthWorX release, July 28, 2026
The company’s compliance page identifies Wellness WorX, Inc. dba Xtension Health as its nonprofit partner and makes claims about nonprofit status and DOL audits. Its comparison document calls the plan a section 125 ERISA healthcare plan and lists telemedicine, hospital indemnity, accident insurance, and life insurance. Those materials are interested-party statements; they do not establish that the IRS or DOL approved the particular arrangement. Ask for the underlying documents and the scope of any claimed audit, certification, or approval. Company compliance page; Company comparison document
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesPublic materials cited here do not establish current employer or employee prices, full plan documents or a summary plan description, insurer and policy details, covered services and exclusions, provider network reach, actual claims-administration arrangements, eligibility rules, payroll arrangements, independent legal analysis of the current plan, or independently measured savings, access, retention, or medical outcomes. Without those details, “safer” and “lower cost” remain claims to test, not conclusions.
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How does HealthWorX compare with recognized benefit structures?
These options have distinct rules. The table is a starting point for classification, not a substitute for reviewing a specific plan’s documents and operation.
| Arrangement | What the cited guidance establishes | What an employer should verify |
|---|---|---|
| HealthWorX model | The company describes a nonprofit partner and a TPA handling multiple operational functions. The cited public material does not independently establish compliance, actual access, or savings. | Current plan structure, documents, contracts, funding and payroll flows, service delivery, risk allocation, and total costs. |
| Employer payment plan reimbursing individual premiums | The IRS generally treats this as a group health plan subject to ACA market reforms; it generally cannot be integrated with individual policies to satisfy those reforms. | Whether the employer’s actual arrangement falls within this category and meets applicable requirements. Obtain benefits counsel’s assessment. |
| Individual coverage HRA (ICHRA) | Final rules issued in 2019 allow an ICHRA to integrate with individual health-insurance coverage or Medicare if specified conditions are met. IRS ACA tax provisions | Whether the arrangement meets ICHRA conditions, the employee’s Marketplace credit eligibility, and the employer’s other obligations. |
| Qualified small employer HRA (QSEHRA) | For 2026, the IRS states the maximum permitted benefit is $6,450 for self-only coverage or $13,100 for family coverage. It must be funded solely by the employer, reimburse qualifying medical expenses after proof of coverage, generally provide the same terms to eligible employees, and satisfy eligibility requirements. An eligible employer generally cannot be an applicable large employer (ALE) or offer employees a group health plan. | Employer eligibility, plan terms, substantiation, employee eligibility, and the applicable year’s limits. IRS Publication 15-B (2026) |
| Insured group plan | The cited materials do not establish a particular plan’s premiums, coverage, or relative cost. | Policy and plan terms, employer and employee contributions, covered services, network access, and any applicable employer duties. |
An ICHRA has a separate affordability test: HealthCare.gov gives the 2026 threshold as 9.96%. If the offer is affordable, the employee and household generally cannot claim a Marketplace premium tax credit for that coverage month. If it is unaffordable, an employee may opt out of the ICHRA and choose a credit if otherwise eligible. The result depends on the employee’s facts and the plan-year calculation. HealthCare.gov ICHRA guidance
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What employer obligations can remain?
Employers that are ALEs have a separate shared-responsibility framework. The IRS says ALEs generally must offer full-time employees affordable coverage providing minimum value or may owe a payment if an employee receives a premium tax credit. A vendor’s cost or compliance claim does not establish that an employer has met this obligation; employers should evaluate their own workforce and offer. IRS employer shared-responsibility Q&A
Treasury and the IRS said in a 2024 bulletin that they were not finalizing proposed amendments to section 1.105-2 at that time and cautioned that “No inference should be drawn” from that decision. They also said compliance efforts concerning the section 105(b) exclusion would continue. This is a reason to take tax treatment seriously, not evidence of a new 2026 enforcement sweep against every plan described as a 105(b) arrangement. Internal Revenue Bulletin 2024-19
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How should an employer evaluate a proposal?
- Classify the arrangement. Ask whether it is an employer payment plan, ICHRA, QSEHRA, insured group plan, or another structure. Request current plan documents, summary plan description, required notices, and contracts. Have benefits counsel assess the employer’s actual facts and applicable rules.
- Calculate total cost. Compare employer contributions, employee payroll deductions, administration fees, premiums, uncovered expenses, and potential cost shifting. Use a defined period and employee population so each option is measured on the same basis.
- Confirm coverage and access. Review covered services, exclusions, cost sharing, provider and prescription access, geographic availability, and how participants obtain care. Request current network and policy information rather than relying on general access claims.
- Map operations and accountability. Identify who determines eligibility, processes claims, handles appeals and complaints, maintains records, and bears insurance risk. Verify each party’s duties in its contract and the plan documents.
- Check tax credits and employer duties. For individual-market coverage, establish whether an employee can receive a premium tax credit under the proposed structure. For an ALE, separately assess shared-responsibility obligations; do not assume an offer is affordable or provides minimum value without the relevant calculation and evidence.
- Grade the evidence. Distinguish official rules, current plan documents, independent audits or measured results, and vendor marketing. If a vendor says a plan is “approved,” ask who approved what, under which facts, and whether that approval covers the arrangement being offered.
What does the 2024 section 105(b) update mean now?
The 2024 bulletin’s decision not to finalize proposed regulatory amendments did not itself bless all arrangements described as section 105(b) plans, nor did it announce a universal crackdown. Treasury and the IRS expressly said compliance efforts would continue. Employers should focus on the specific design and operation of the proposed benefit and use current professional advice rather than treating either the bulletin or a vendor’s characterization as a blanket ruling.
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