Is Section 125 too good to be true?
What CBIZ and HitesmanLaw found.
Saving $681.60 per W-2 employee per year at zero employer cost while every employee takes home $72 more per paycheck — yes, that's the kind of pitch that should make you skeptical. Here's why it's real, what makes it different from the FICA-reduction schemes the IRS has correctly flagged, and the named institutional record that verified it in 2025.
The skepticism: well-founded
You've probably been pitched a wellness-based FICA reduction plan before. You probably ruled it out — correctly. The IRS publishes guidance on cafeteria plans, and the IRS Office of Chief Counsel has issued specific advice memoranda flagging arrangements where the same dollars get treated as both pre-tax salary reduction and tax-free benefit payment. That's the “double-dip” problem. If a wellness plan tries to do that, the IRS is right to flag it — and your skepticism is correct.
What makes this program structurally different
The Section 125 Preventive Care variant we work with is built around three IRS authorities working together: IRC § 125 (the cafeteria plan statute, in continuous force since 1978), IRC §§ 105 and 106 (employer-paid medical expense and accident-and-health-plan treatment), and IRS Revenue Ruling 69-154, Situation 3 — a specific published IRS ruling describing how indemnity insurance benefit payments retain favorable tax treatment when funded through a properly structured plan.
The salary reduction funds a real HIPAA-compliant participatory wellness program (24/7 telemedicine, 400+ free generic medications, dental savings up to 60%, mental health counseling — actual benefits employees actually use). The wellness reward flows through a licensed indemnity insurance carrier— not back as untaxed wages. That's the structural difference from the “double-dip” arrangements: real benefits, real carrier, real published IRS authority.
Who verified it — by name
HitesmanLaw P.A. — May 5, 2025 opinion letter
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 (ERISA Compliance for Health & Welfare Plans, Thomson Reuters / EBIA), member of the ECFC Technical Advisory Group. Her 8-page formal 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 structures and concludes this program is built differently and compliantly.
CBIZ Advisors LLC — August 22, 2025 review letter
CBIZ is a Top-7 U.S. accounting firm — publicly traded (NYSE: CBZ), 10,000+ employees across 100+ offices, 135,000+ clients nationally. Their independent review covers IRC §§ 125, 105, 106, plus ERISA, ACA, and COBRA. CBIZ's 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 (himself a CPA) before enrolling his nationwide organization.
$500,000 legal protection per enrolled employer
Insurance-backed coverage of up to $500,000 per employer + $10,000 per employee participant — covering IRS audit defense costs and attorney fees. It's a backstop, not a substitute for due diligence. It exists because the operator stands behind the structure financially. See the full compliance authority page →
The three buyers who confirmed it independently
Three sophisticated due-diligence buyers in our public case-study record verified the program with their own counsel before enrolling:
- Brandon Zora, CEO and CPA at Black Tiger Transportation (66-employee Southern CA medical transport): reviewed every relevant IRS code himself before signing. Annual savings: $140,000. Case study →
- Ariel Joudai, CPA, CFO at Affinity Hospice (multi-state hospice care): commissioned the CBIZ review before enrolling. Annual savings: $140,000+. Case study →
- Dan Salceda, owner and practicing attorney at Golden Living Point Loma (51-employee San Diego assisted living): read the IRS codes himself, consulted CPAs, secured an independent legal opinion before enrolling. Annual savings: $120,000. Case study →
Show this page to your CPA
That's the actual recommended path. Bring the Hitesman opinion + CBIZ review (both share-able PDFs available on your free 15-minute analysis call) to your own CPA. They will confirm the structure works exactly as described — and they will also confirm they cannot operate it themselves (it requires a plan administrator, a HIPAA-compliant wellness platform, a licensed indemnity carrier, and $500K of audit-defense backing — none of which a CPA firm holds). Knowing about Section 125 and being able to implement one are different things.
Run your own number
Skepticism doesn't go away from reading. It goes away from running the math against your own business and seeing it hold up under your CPA's scrutiny. The calculator below returns your exact net annual FICA savings + a Workers' Comp reduction estimate at your industry classification.
See What You'd Save
5 quick questions · instant estimate · no email required
Minimum 10 W-2 employees · $25K+ salary · ACA-compliant health coverage required
Verified by CBIZ & HitesmanLaw · Zero cost · Zero obligation
When you're ready, book the free 15-minute analysis → with the tax specialist for your exact verified figure.
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 ↗The questions that come up
Find Out Your Number.
Free. No Pitch. Just Math.
Verified: CBIZ Advisors LLC (Aug 2025) · HitesmanLaw P.A. (May 2025)
$500K legal protection per enrolled employer · IRS Section 125 · Federal law since 1978