COMPLIANCE
IRS Determination Letter
HealthWorX is partnered with a certified 501(c)(3) non-profit organization called Wellness WorX, Inc. dba Xtension Health. All 501(c)(3) non-profits must receive approval from the IRS by receiving a favorable 'Determination Letter', which certifies its status as a Charitable Organization. Beware of companies that do not have this certification or status, as they are not legally able to reimburse medical expenses without them being taxed as income. Click HERE to view the Xtension Health Determination Letter.
Department of Labor Audits
It's a fact. All major Third Party Administrators are audited by the DOL every three to five years. If you are solicited by a TPA or other organization regarding healthcare coverage, the most sure-fire way to confirm legitimacy is to ask (require proof) when their last DOL audit was. You can read our audit whitepaper HERE.One of the most common scams being perpetrated today is the infamous Section 105(B) Reimbursment plan. Typically, once these plans are audited by the DOL, they are given 'Cease and Desist' orders. If they have never been audited, then there is no way to verify if their plan is compliant with ERISA or Section 125 of the I.R.C. The HealthWorX plan has been audited by the U.S. Department of Labor, and is compliant with its guidelines and best practices recommendations.
ERISA and Section 125 Compliance
In order for healthcare to be offered as a pre-tax group plan through your employer, it must meet certain criteria outlined in the Employee Retirement Income Security Act of 1974 (ERISA). ERISA sets uniform minimum standards to ensure that employee benefit plans are established or maintained in a fair and financially sound manner. In addition, employers have an obligation to provide promised benefits and satisfy ERISA's requirements for managing and administering private retirement and health & welfare plans. Section 125 of the I.R.C. allows contributions to medical plans to be withheld on a pretax basis, thereby lowering taxable income, which means employees pay less in federal income tax and Medicare and Social Security taxes.But how can you be sure your plan qualifies for both? The HealthWorX plan documents are authored and reviewed by the renowned Groom Law Group out of Washington D.C. Having a specialized legal team produce the required documents and plan structure is vital to compliance. See the Groom legal opinion letter for the HealthWorX plan HERE.
Comparing the HealthWorX Plan to 105(b) Wellness Indemnity Reimbursement Plans
The IRS has issued numerous memorandums directed at 105(b) reimbursement programs (see example HERE). These programs claim to be similar to the HealthWorX plan, but instead of making donations through a certified non-profit, operate using loopholes in the tax code. Be advised that anything called a 'reimbursement' that comes from any entity such as an administrator, broker, etc. may be taxable to both employer and employee.
In the interest of transparency, we asked former IRS Chief Counsel, Ross Greenberg, to issue an 'opinion letter' (view HERE) distinguishing the HealthWorX plan from the unfortunate shadow cast by these plans. In order for any type of subsidy, credit, or donation to be non-taxable, it must either come from a certified non-profit such as our partner Wellness WorX LLC dba Xtension Health, (click HERE to see their most recent Form 990 tax return), or be a reimbursement for medical services actually rendered.
We've simplified things with this simple one-page brochure. Click HERE to gain an understanding of the differences between the HealthWorX plan and 105(b) programs.