The technical compliance structure of the Employer Sponsored Preventive Access (ESPA).
This page is written for brokers, CPAs, HR directors, and outside counsel. It names the IRS code sections that govern the ESPA, the regulatory framework, and the structural safeguards in every plan we put in place. For a plain-English version of this content, see Compliance, Made Simple.
Regulatory framework
The ESPA is structured under named IRS code sections and is consistent with applicable IRS memoranda, ERISA regulations, HIPAA, and the Americans with Disabilities Act (ADA).
Self-Insured Medical Reimbursement Plan (SIMRP)
Governed by IRS Codes 213(d), 106(a), 105(b), 1.105-11(i), and 104(a)(3), and by applicable IRS memoranda, ERISA regulations, HIPAA, and the ADA.
Office of Chief Counsel Memorandum 201703013
Office of Chief Counsel Internal Revenue Service Memorandum Number 201703013, dated January 20, 2017, addresses the tax treatment of employer-provided wellness programs and the medical care they provide. The memorandum states: the value of coverage by an employer-provided wellness program that provides medical care (as defined under IRS Code 213(d)) is generally excluded from an employee’s gross income under IRS Code 106(a).
The pre-taxing of plan cost deductions, made possible under a SIMRP and a Section 125 Cafeteria Plan, creates the reduction of taxable income that generates the payroll tax savings the employer recovers.
Integrated Section 105 plan
The ESPA is always paired with the employer’s existing major medical plan, which must be ACA-approved. The combination forms an integrated Section 105 plan. The SIMRP must be paired with major medical insurance for the integrated structure to function.
Code summary by function
| Function | Code sections that apply |
|---|---|
| Preventive health benefits component | IRS §106(a) (ERISA); IRS §213(d) (ADA); IRS §105(b) (HIPAA); IRS §125; IRS §1.105-11; IRS §104(a)(3) |
| Medical plan | IRS §213(d); ACA |
| Pre-tax treatment | IRS §213(d); IRS §106(a); IRS §125 |
| Post-tax reimbursement treatment | IRS §213(d); IRS §105(b); IRS §1.105-11(i); IRS §104(a)(3); IRS §1.105-11(k)(1); IRS §1.105-11(k)(2) |
The three integrated plan documents
Every ESPA we put in place includes three integrated plan documents, paired with the employer’s existing major medical plan:
Section 125 Cafeteria Plan
The ESPA pairs these two structures with a preventive health benefits plan. Together, they form three integrated documents that work alongside your major medical plan. The structure is in the tax code. What BizPower Benefits provides is the plan documents, the technology, and the administrative infrastructure that make it simple to put one in place.
Self-Insured Medical Reimbursement Plan (SIMRP)
Governs the post-tax reimbursement of qualified medical expenses under IRS Code 105(b). Reimbursement guidelines are spelled out in the SIMRP plan documents.
Preventive health benefits plan
Governs the preventive health benefits component, including the annual comprehensive lab panel and the access to virtual care services delivered through the employee technology portal.
Allowable reimbursement amounts
Allowable pre-taxing and reimbursement amounts are based on the U.S. Department of Health and Human Services report (July 2016) and on the national average cost for the monthly value of benefits.
Amounts allowed are also based on the fair market value of benefits provided through the preventive health benefits plan for preventive services that are IRS Code 213(d) compliant.
Post-tax reimbursement treatment
Reimbursements and payments for medical care (as defined under IRS Code 213(d)) provided by the plan are excluded from the employee’s gross income under IRS Code 105(b), as further defined by IRS Code 1.105-11(i) and IRS Code 104(a)(3). Reimbursement guidelines are spelled out in the SIMRP plan documents we provide.
External references
Additional context on the regulatory framework around health and wellness programs in the workplace
- The CPA Journal: "20 Questions about Establishing a Health & Wellness Program in the Workplace" (January 2021)
- Internal Revenue Service Office of Chief Counsel Memorandum 201703013 (January 20, 2017)
- BizPower Benefits Compliance Overview (PDF, available on request)
- Your HR team, on day-to-day plan administration
For your CPA or outside counsel
We coordinate compliance work with your CPA and outside counsel directly. The BizPower Benefits Compliance Overview PDF is available on request. We can schedule a joint call to walk through the plan documents and answer technical questions before any signatures.
Frequently asked questions
The memorandum is publicly available from the IRS Office of Chief Counsel. Reference number 201703013, dated January 20, 2017.
Yes. The ESPA includes preventive health benefits paired with an ACA-approved major medical plan to form an integrated Section 105 plan that meets the requirements of an ERISA-governed employee welfare benefit plan.
Send them. The plan documents are designed for outside review. We are happy to schedule a joint call with your CPA before any signatures.
The plan is structured to comply with HIPAA. The employee technology portal is built so that BizPower Benefits never holds employee medical records. Plan data is handled under HIPAA-aligned safeguards.
The plan does not require employees to share medical information at enrollment, does not condition eligibility on a specific health outcome, and does not introduce selection bias. These design choices keep the plan ADA-compliant.
Note: Tax benefits stem from the structure of the Self-Insured Medical Reimbursement Plan, which uses pre-tax funding. Employers benefit from reduced FICA taxes, while employees only realize tax advantages if they actively participate in the plan and earn the reimbursement after-tax. Without participation, any reimbursement becomes taxable, negating the financial benefit.
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