The core of the issue lies in the aggressive interpretation of Section 105(b) statutes, which were originally intended to reimburse employees for legitimate, unreimbursed medical expenses. Promoters often attempt to repurpose these plans as payroll-reduction strategies, funneling cash back to employees under the guise of wellness or indemnity benefits. However, the IRS has consistently signaled through a series of memoranda—including 201622031, 201719025, and 202323006—that such payments are taxable income when they lack a direct link to actual medical costs.

Dr. John Zabasky, CEO of WorXsiteHR, argues that employers are being sold risky tax assumptions rather than sustainable healthcare solutions. Relying on these schemes exposes organizations to corrected tax reporting and administrative penalties. In contrast, the HealthWorX nonprofit–third-party administrator model focuses on actual provider access and claims administration. By undergoing successful U.S. Department of Labor audits, this alternative framework prioritizes compliance and healthcare delivery over the pursuit of questionable tax advantages.