The Nonprofit-TPA Model is the Future of Healthcare

HealthWorX thrives as IRS Guidance Warns of Tax-Engineered 105b Reimbursement Programs

OXNARD, Calif., Sept. 3, 2026 /PRNewswire/ -- HealthWorX today declared that the nonprofit–third-party administrator model represents the future of employer-sponsored healthcare because it aligns mission, administration, and measurable access to care. Unlike programs whose central economic proposition is returning payroll deductions to employees as purportedly tax-free cash, the HealthWorX model is designed around the delivery and administration of meaningful healthcare services.

Under the nonprofit–TPA model, a mission-driven nonprofit supports access to healthcare, while an experienced third-party administrator manages enrollment, eligibility, plan operations, participant support, provider access, claims processing, and compliance. The result is a structure designed to help employers expand access to care—particularly for lower-income and frontline employees—without turning a health plan into a circular payroll transaction.

"Healthcare should provide healthcare," said Dr. John Zabasky, co-founder and Chief Executive Officer of WorXsiteHR, the third-party administrator for HealthWorX. "The future belongs to models that combine a nonprofit mission with disciplined benefits administration, not arrangements that deduct money from a paycheck, return substantially the same money under another label, and then call the payment a tax-free medical reimbursement."

HealthWorX emphasized that the Internal Revenue Service has repeatedly addressed arrangements that attempt to exclude cash payments from taxable income under Internal Revenue Code Section 105(b). Section 105(b) generally protects reimbursements for an employee's actual medical-care expenses. It does not provide a blanket exclusion for cash payments simply because they are routed through a wellness plan, indemnity policy, cafeteria plan, or self-funded health arrangement.

In Chief Counsel Memorandum 201622031, the IRS concluded that cash wellness rewards and reimbursements of premiums previously paid through pre-tax salary reduction are included in employees' gross income and treated as wages. In Memorandum 201719025, the IRS examined arrangements promoted by employers in which large pre-tax contributions were returned as purportedly nontaxable cash, while employee take-home pay remained largely unchanged. More recently, Memorandum 202323006 reaffirmed that fixed wellness-indemnity payments are taxable when employees have no corresponding unreimbursed medical expenses. These memoranda are not binding precedent, but they provide a clear and consistent statement of the IRS's analysis.

The distinction is straightforward: a legitimate Section 105(b) reimbursement must be tied to medical care actually incurred and cannot exceed the unreimbursed expense. A payment that is available regardless of whether an employee incurred an expense, that reimburses an amount already paid on a pre-tax basis, or that pays out different amounts each month for the same medical service (e.g., a Health Risk Assessment via a phone app) cannot be made nontaxable merely by plan terminology. The IRS has also stressed that medical reimbursements must be properly substantiated.

HealthWorX believes this enforcement environment will accelerate demand for models that deliver real healthcare value rather than temporary payroll optics. The nonprofit–TPA structure offers employers a path to combine private-sector efficiency, professional plan administration, community benefit, and expanded access to essential care.

HealthWorX successfully completed a U.S. Department of Labor (DOL) audit in 2022. HealthWorX views that experience as evidence of the importance of operational discipline, documented plan administration, and accountable governance. DOL audits are routine in the TPA industry, occurring every three to five years, and are necessary to validate ERISA compliance and plan legitimacy. 

"Our model is built for the long term," says Sharon Rowell, co-founder with Zabasky and President. "Employers should ask a simple question: Is the program primarily delivering healthcare, or is it primarily generating a recurring cash payment? HealthWorX is committed to the first."

About HealthWorX

HealthWorX advances employer-sponsored healthcare through a nonprofit–TPA model that expands access, reduces barriers to care, and supports sustainable benefits administration.

Media Contact:
Dr. Diana McCosham, MD, MBA, Marketing Director, WorXsiteHR, [email protected], 877-479-3591 x110

SOURCE HealthWorX