As a business owner or corporate executive, you may have been approached by brokers or companies promoting various types of wellness and/or healthcare reimbursement arrangements. The typical advocate claims that under such plans, both the employer and employees can save tax dollars, the employee participants receive an increase in take-home pay, and the employees are eligible to receive virtual medical benefits. The question that many companies and executives are asking – and rightfully so – Is this too good to be true?

The answer to this key question depends on the plan being promoted. There are key differentiating factors between non-compliant programs and other legitimate plans. Once you understand these factors, you can make an informed decision regarding your company’s healthcare plan.

Issues Related to Certain Unrelated “Wellness Plan” Arrangements

Certain articles largely based on isolated cases and related scrutiny address a situation referred to as the classic “double dip.” First, employees pay for their portion of the cost…
…Second, employees are paid a portion of their salary reduction contribution…
…The IRS has made clear in Revenue Ruling 2002-3 that the purported tax-free payments are… (contact us for the entire article) 

How is Champ Different?

CHAMP Plan Basics

The CHAMP Plan is a single employer-sponsored plan comprised of two separate components: (1) the pre-tax Champion Health Minimum Essential Coverage Plan (the “MEC Plan”); and (2) the post-tax Champion Health Population Management Plan (the “Health Population Management Plan”). 

MEC Plan Component

The MEC Plan is the pre-tax component of the CHAMP Plan. The employee premiums…
Under the MEC Plan, members have full access to in-person physician office and urgent care services, prescriptions, and preventive care services, as set forth in the plan. Benefit claim payments…
…Accordingly, there are no tax implications for the member or the employer Plan Sponsor. (contact us for the entire article) 

Health Population Management Plan Component

The Health Population Management Plan is the post-tax component of the CHAMP Plan. The employee payments required for participation in the Health Population Management Plan are made…
…Under the Health Population Management Plan, members complete an initial health risk assessment…
…Based upon the risk assessment, the Health Population Management Plan evaluates the specific needs of the member and…
…for the member to achieve plan compliance. Thereafter, when the member completes a prescribed Health Management activity or task…
…This payment is properly excludable from the member’s gross income under Section 104(a)(3). (contact us for the entire article) 

CHAMP Plan Distinguishing Factors

While it’s clear that certain plan arrangements have attempted to impermissibly reduce certain taxes or “double-dip”, the CHAMP Plan is wholly distinguishable from these arrangements.

Premium payments for the Health Population Management Plan component are made post-tax. Accordingly, any related claims reimbursement payments received under this plan component are not taxable. 

It’s simple – there is no “double-dipping” if the premium payments were taxed in the first place.

This is why the CHAMP Plan is distinguishable from other similar plans. It’s a HUGELY important distinction.