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Flex Health is the marketing branch of HCMC, a tax-subsidized Section 125 plan focused on all-inclusive preventative healthcare with a hospital indemnity component. Employers who leverage our program offer a variety of supplementary benefits to employees while gaining tax incentives in the process.
Flex Health is the exclusive marketing partner of HCMC, the underlying service provider. HCMC often facilitates initial conversations through Flex Health; new clients are onboarded directly with HCMC. Flex Health also has several referral partners who market this program on its behalf. “Flex Health” is used interchangeably with HCMC in the context of these FAQs.
Section 125 is a tax code passed in 1978 allowing employees to use their salary toward certain medical benefits on a pre-tax basis. A Section 125 (cafeteria) plan is an employer-sponsored program that brings pre-tax benefits to a company’s employees.
Companies should have at least 50 W-2 employees and use one of the common payroll providers we integrate with. Employees are qualified on a case-by-case basis based on their taxable income, deductions, and filing status.
FSAs allow employees to set aside pre-tax money for short-term medical expenses but have a “use it or lose it” clause at the end of the year. HSAs permit employees to allocate salary toward high-deductible health plans, allowing funds to roll over annually. Flex Health is an indemnity program that covers monthly premiums with no leftover funds.
Flex Health would integrate alongside your existing plan. Section 125 is the tax mechanism; Flex Health, FSAs, and HSAs are all examples of plans leveraging Section 125. Flex Health does not interfere with an FSA/HSA plan.
No. The program does not interfere with any existing major medical, dental, vision, etc. plans. Flex Health does not replace or compete with these plans, it only complements them as a supplementary add-on.
For one, insurance is a slow-moving industry. However, mainly, Section 125 has been around since 1978, traditionally such plans have been confined to FSAs, HSAs, medical, disability, cancer, and life coverage. As Obamacare became federalized over the last decade, carriers have recently started adopting new policies and initiating the push toward wellness plans and preventative healthcare.
HCMC (the service provider) opened its doors in 2018 after getting approved by the Department of Insurance. Over 24,000 employees are enrolled across 170+ clients.
For companies to onboard, there is no upfront cost. Flex Health is compensated as a portion of the tax savings incurred, after the first successful payroll run, through a $35 PEPM administrative fee to maintain the program and continue providing the benefits.
While there is no hard enrollment minimum, this program attains the best results for 100+ employee companies.
No, you don’t change your broker as they likely don’t offer this plan specifically. We aim to work alongside your existing insurance broker.
No, Flex Health is where the buck stops when it comes to the program. Flex Health works alongside a variety of brokers, agencies, and marketing partners to facilitate initial conversations.
Yes. On this plan, employees deduct a high pre-tax premium from their salary, for they receive an 84% reimbursement if they complete a qualifying activity each month.
Yes. Flex Health auto-enrolls qualifying employees. Employees can opt-out any time prior to and after open enrollment.
Yes. The core of Flex Health’s program is limited hospitalization insurance (hospital indemnity) with up to $500 – $1,200 in benefits payable each month (depending on the premium). The preventative health benefits are a rider to this policy and are matched with the carrier’s CPT-coded activities.
Flex Health (HCMC) is the service provider. Flex Health has a partnership with two underlying carriers – Clear Spring Health and Crum & Forster – for hospital indemnity and a network of premium vendors to administer preventative health.
Yes. This program is licensed and approved by the Department of Insurance in 43 States. We default to the Texas Association if a State does not have specific guidelines. We also use an Alabama trust, as well as a tribal carrier that can write in all 50 states.
In addition to the standard plan, Flex Health can offer an enhanced MEC plan to fulfill ACA compliance for smaller groups.
Schedule a call with us, and we will connect you with some references specific to your industry!
Preventative healthcare centers on preventing and finding treatment for chronic diseases and terminal illnesses before they onset. Flex Health equips employees with 24/7 telemedicine, DNA + biometric screenings, smoking cessation, health risk assessment, and more through their Personal Health Dashboard™. See our benefits page for more info.
Flex Health has a 30-35% engagement rate beyond the standard digital health coaching used by the majority of employees.
This is completely normal. Since the program is entirely voluntary and our benefits pass on a $0 co-pay, employees have the option of choosing between Flex Health and their existing coverage for an overlapping service.
Employees don’t make self-guided contributions per se but rather pay a pre-tax premium each month.
Flex Health is partnered with Clear Spring Health and Crum & Forster for hospital indemnity coverage and vendors such as Recuro Health, CRL, Dynamic Laboratories, FEI, Work Shield, US Health Center, and more for preventative healthcare.
Employees are reimbursed for ~84% of their monthly pre-tax premium by the carrier if they fulfill one of the CPT-coded activities: 96161, 80061, 98967, 99071, 99401, or 99441. The majority of employees enrolled utilize a form of digital health coaching (99401) to get the reimbursement.
Employees fill out and submit an indemnity claim form directly with our carrier, and receive claim payments through their paycheck.
On average, employers see a net $600 per year in FICA savings for each employee enrolled while active employees see ~$70-90 per month increase on their take-home paycheck.
When employees are on this program, their gross income (wages) is reduced by the amount of pre-tax premiums paid, saving the employer on their 7.65% FICA contributions. When utilizing the program, the employee is reimbursed for ~84% of their premiums, leaving them with tax savings in excess of the cost.
Flex Health operates a Section 125 program with a policy written by an underlying carrier and approved by the Department of Insurance: in an effort to offset the cost of major medical premiums and save the US federal government substantial amounts on future Medicaid expenses. Our program does not replace major medical, but it does incentivize employers to integrate preventative healthcare with their organization. For qualifying companies, the end result is a program generating tax savings surplus to its outstanding costs.
Under the policy written by our partner carriers, employees are reimbursed for ~84% of their pre-tax premiums each month if they complete one of the CPT-coded activities. The majority of employees fulfill 99401 by utilizing digital health coaching each month.
The employee is being reimbursed for qualified medical expenses (the program’s premiums), below the “excess benefit” threshold, causing the reimbursement to be excluded from their gross income under Section 105(b).
No, Flex Health only qualifies employees who would see a positive increase in their take-home pay. Those employees who have too many deductions, or not enough taxable income, to generate positive tax incentives, will not be enrolled.
The IRS issued a CCA (an IRS employee’s interpretation of the tax code, not governing law) in 2023 on payments to employees from wellness plans. Per our legal counsel, we believe the CCA incorrectly uses worker’s comp law to state that indemnity payments are taxable wages. Flex Health offers a fixed-indemnity healthcare plan under Section 125, deducting premiums from employees’ gross income under Section 106(a). The indemnity payments, which reimburse out-of-pocket medical expenses and are below the “excess benefit” threshold, are excluded from employees’ gross income under Section 105(b). Wages, defined as remuneration for services, do not apply to indemnity payments, as confirmed by long-standing IRS guidance. We provide legal memos from various firms to supply a thorough breakdown.
Flex Health routinely conducts pro forma reviews on a case-by-case basis to review the long-term impact our program has on old employees’ SS checks. From the recent review, it is estimated that an employee earning $44,000/year enrolled in the Flex Health program for 5 years or less would see at most a $60/year decrease in their anticipated SS checks.
No, employees’s tax withholding is automatically adjusted through your payroll codes, and premiums paid are added to W-2 Box #12DD.
70-120 days to onboard (depending on the payroll provider), 4 weeks to run open enrollment. After contracts are signed, Flex Health will work with your payroll/HR team to run an anonymous demographic census and create a deduction report for the TPA to approve. Once the TPA approves, Flex Health will set up deduction codes and integrate with your payroll to complete the first dry run, verifying that the employees’ tax withholding and pay are being adjusted. If the dry run is successful, the final step is the 4-week implementation period concluded by the first live payroll run.
We work with over 50 payroll systems, not limited to ADP, Paychex, Paycom, Paylocity, Gusto, Rippling, UKG, and many more. We are also compatible with companies running payroll in-house. Our compatibility with PEOs can vary, as some end up retaining the employer’s tax savings.
Flex Health is compatible with some PEOs. Our program does not work with PEOs which retain the employer’s tax savings. Please schedule an appointment to find out if we can work with your PEO.
Flex Health qualifies employees on a one-by-one basis, accepting only those who would see a positive increase in their take-home pay as a result of being enrolled in the program. Typically, this means an employee needs to be W-2 (full-time or part-time) and make ~$30,000/year or more. 1099s are ineligible.
During the 4-week implementation period, employees receive comprehensive marketing material with legal, benefits, and opt-out guidance so they can make the most of the program. Flex Health manages these communications on behalf of the employer. Employees simply access the program by downloading a mobile app (the Personal Health Dashboard™) and have multi-lingual educational material available to them at any time.
Yes. Since this is a voluntary program, employees can opt out prior to activation, during the 4-week implementation period, or at any time after the first month they are enrolled. To opt-out, employees call (or together with HR) a 1-800 number to have their coverage removed. Employees will retain access to benefits for 6 weeks after removal.
No, employees do not need to prove financial hardship to the IRS. Flex Health simply sends the hardship form to the employee.
Flex Health is an auto-enroll program; open enrollment can be run anytime throughout the year. If new employees are eligible, they are auto-enrolled; if active employees fall below the qualifying threshold at any time, they are disenrolled.