HealthWorX Warns IRS Memos Make Tax-Engineered Section 105(b) Programs Too Risky

HealthWorX, a nonprofit third-party administrator (TPA) model, has issued a warning asserting that recent U.S. Internal Revenue Service (IRS) memos have made tax-engineered Section 105(b) healthcare programs too risky to trust. The organization argues that its model provides actual "cost-free" healthcare, rather than converting payroll deductions into questionable "tax-free" cash payments.

The organization stated that IRS pronouncements on tax fraud and related memos issued in 2026 have made such programs suspect. HealthWorX claims its nonprofit TPA approach offers a more transparent and secure method for managing healthcare benefits, focusing on direct healthcare services instead of aggressive tax planning.

These programs have historically been marketed as a way for employers and employees to deduct healthcare expenses. HealthWorX's analysis suggests that new IRS guidance has significantly increased the risk and potential for tax penalties associated with these models.

HealthWorX urges companies to critically review their current healthcare benefit programs and assess their compliance with the latest tax laws and IRS directives. The warning specifically targets those utilizing employer-offered, tax-engineered 105(b) programs.

The company highlighted that the nonprofit-TPA model focuses on delivering genuine healthcare benefits without the associated risks of tax-engineered schemes. This approach aims to provide clarity and security for employers and employees navigating complex healthcare regulations.