Section 125 Compliance Documentation Hub
By David Newman · Referral Partner, Section 125 Savings · San Pedro, CA
Single authoritative reference for the Section 125 Preventive Care program's compliance record. Named credentials, share-able documentation, IRS authority, federal statute citations, and the $500,000 insurance-backed legal protection structure. Every CPA reviewing this program walks through this list.
The compliance stack — six independent layers
1. IRC § 125 — The federal statute
Internal Revenue Code Section 125 has authorized cafeteria plans since 1978. The original federal authority — written by Congress, signed into law, continuously in force for 47+ years. View 26 U.S.C. § 125 →
2. IRS Revenue Ruling 69-154 (Situation 3)
Specific published IRS ruling supporting the indemnity benefit payment structure used by the program. Situation 3 of the ruling describes the exact mechanism for how post-tax benefit payments retain favorable treatment when funded through a properly structured plan. The Preventive Care program is built directly on this authority.
3. HitesmanLaw P.A. — May 5, 2025 Opinion Letter (8 pages)
Darcy L. Hitesman, J.D. — Super Lawyer every year since 2000, AV-rated in Martindale-Hubbell since 1998, co-author of the national ERISA compliance manual (Thomson Reuters / EBIA), member of the ECFC Technical Advisory Group. Her opinion concludes: "In this firm's opinion, the Program described satisfies applicable IRS requirements." The opinion specifically addresses the IRS Chief Counsel Advice memoranda on "double-dip" arrangements and confirms this program is structured differently and compliantly. Verify her credentials at hitesmanlaw.com.
4. CBIZ Advisors LLC — August 22, 2025 Review Letter
CBIZ Advisors LLC (NYSE: CBZ) — Top-7 U.S. accounting firm, 10,000+ employees, 100+ offices, 135,000+ clients. Independent review covering IRC §§ 125, 105, 106, plus ERISA, ACA, and COBRA. Their conclusion: "If operated per its provisions, the Program appears to satisfy the requirements of ERISA, the ACA, and COBRA as well." The review was commissioned by Affinity Hospice's CFO (a CPA) before he enrolled his nationwide hospice organization. Verify CBIZ at cbiz.com or via SEC filings.
5. $500,000 Legal Protection Per Enrolled Employer
Insurance-backed coverage of up to $500,000 per enrolled employer + $10,000 per employee participant. Covers IRS audit defense costs and attorney fees. The protection runs as long as the employer is enrolled. It exists because the program operator (Virginia Fish, CPA at ACA Solutions Hub) stands behind the structure financially. The legal protection is a backstop — not a substitute for due diligence with your own CPA.
6. Your Own CPA
Every business in our case studies — including a CEO who is himself a CPA (Brandon Zora at Black Tiger Transportation), a CFO who is a CPA (Ariel Joudai at Affinity Hospice), and a practicing attorney (Dan Salceda at Golden Living Point Loma) — independently verified the program with their own counsel before enrolling. That's the expected standard. The Hitesman opinion and CBIZ letter are share-able PDFs your CPA can review in 10-15 minutes.
Federal regimes covered by the compliance review
- IRC § 125 (cafeteria plans) — pre-tax salary reduction structure, plan document requirements, nondiscrimination testing, qualifying-event rules.
- IRC § 105 (accident & health plan benefit payments) — tax treatment of benefit payments through the program's licensed indemnity carrier.
- IRC § 106 (employer contributions to accident & health plans) — employer-side tax treatment of contributions.
- ERISA — Employee Retirement Income Security Act welfare plan requirements, plan document, fiduciary obligations, reporting.
- ACA — Affordable Care Act employer mandate compliance, integration with group health plans, MLR-related requirements.
- COBRA — continuation coverage rules for the underlying group health components.
- HIPAA — Health Insurance Portability and Accountability Act privacy + participatory wellness program rules.
Verified by the Best in the Country
Skepticism is the right response. We don't ask you to take our word for it — we bring institutional proof that convinced CPAs, CFOs, attorneys, and insurance brokers to enroll their own companies.
Darcy L. Hitesman, J.D.
35+ years as an Employee Benefits attorney specializing in IRC Section 125, ERISA, HIPAA, and the ACA. Her May 5, 2025 opinion letter concludes: “In this firm's opinion, the Program described satisfies applicable IRS requirements.”
She specifically reviewed the IRS Chief Counsel Advice memoranda on "double-dip" arrangements — the exact schemes the IRS has flagged — and concluded this program is built differently and compliantly.
CBIZ Advisors LLC
CBIZ independently reviewed the program against IRC §§ 125, 105, and 106, plus ERISA, ACA, and COBRA requirements. Their August 22, 2025 letter concludes: “If operated per its provisions, the Program appears to satisfy the requirements of ERISA, the ACA, and COBRA as well.”
This review was commissioned by Affinity Hospice's CEO before enrolling his nationwide organization — and the CFO (himself a CPA) shared the letter publicly in his testimonial.
Direct From the U.S. Government
Section 125 has been in the Internal Revenue Code since 1978. Congress wrote it there specifically to encourage employers to fund preventive healthcare for American workers. This is not a loophole — it is the precise, intended use of a 47-year-old federal law, grounded in IRS Revenue Ruling 69-154, the specific published ruling supporting the benefit payment structure.
→ Verify on IRS.gov — Section 125 Cafeteria Plans ↗Common compliance questions
Content reviewed by Virginia Fish, CPA — tax and employer benefits specialist with 10+ years in financial reporting and payroll tax strategy.
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Verified: CBIZ Advisors LLC (Aug 2025) · HitesmanLaw P.A. (May 2025)
$500K legal protection per enrolled employer · IRS Section 125 · Federal law since 1978