213(d) Wellness Compliant Wellness Program

Section 213(d) of the Internal Revenue Code defines what counts as a qualified medical expense, the kinds of expenses that can be paid for with tax-advantaged dollars from HSAs (Health Savings Accounts), FSAs (Flexible Spending Accounts), or HRAs (Health Reimbursement Arrangements).

Advantages of these kind of programs include:

1) Tax Advantages for Employers and Employees
Employers can often fund or reimburse qualified wellness services tax-free through HRAs or FSAs.
Employees can pay for eligible services pre-tax, reducing their taxable income.

2) Integration with Health Benefits
A compliant wellness program can connect directly to insurance or reimbursement accounts, making it seamless for participants to use their existing benefits to cover program costs.

3) More Credibility and Oversight
213(d) compliance ensures the program includes clinically valid, medically supported elements (e.g., biometric screenings, chronic condition management, smoking cessation, nutrition counseling).
This helps employers keep compliant with IRS or ERISA regulations by ensuring the program is recognized as legitimate healthcare, not a “perk.”

4) Better Participation Rates
When employees can use tax-free dollars to pay for wellness offerings, participation often increases because the perceived cost barrier drops.

5) Lower Long-Term Healthcare Costs
Since 213(d)-compliant programs emphasize prevention, early detection, and data-driven wellness, they often yield lower claims over time — benefiting both the employer’s health plan and the insurer’s risk pool.

Note not all health activities qualify. Here are some examples of what qualifies and what doesn’t under these type of plans:
Qualifies: Biometric screenings, smoking cessation, weight loss for diagnosed obesity, stress management under physician recommendation.
Does not qualify: Gym memberships, general fitness classes, massages (unless prescribed), or purely “lifestyle” programs.

Self-Insured Medical Reimbursement Plan (SIMRP)

A Self-Insured Medical Reimbursement Plan (often called an “Account-Based Health Plan” or “Self-Funded Medical Reimbursement Plan”) is a health benefits arrangement where an employer assumes the financial risk for providing healthcare benefits to employees, rather than fully paying premiums to an insurance company. These plans can include things like Health Reimbursement Arrangements (HRAs) or similar structures. Here are the main benefits:

Cost Control & Savings

  • Lower premiums: Employers don’t pay large insurance premiums for full coverage—they only fund the actual claims plus administrative costs.

  • Cash flow benefits: Funds aren’t tied up in premiums; claims are paid as they occur.

  • Stop-loss protection: Many plans include stop-loss insurance to limit the employer’s financial risk for extremely high claims.

Flexibility

  • Plan design: Employers can customize the plan to reimburse specific medical expenses that match employee needs.

  • Employee choice: Can pair with high-deductible health plans (HDHPs) and allow employees to choose how to spend reimbursements.

Tax Advantages

  • Employer contributions to these plans are usually tax-deductible, reducing taxable income.

  • Employees can often use reimbursements tax-free for eligible medical expenses.

Transparency & Control

  • Employers can see actual claims data, allowing better budgeting and wellness planning.

  • More control over plan administration and which services are eligible for reimbursement.

Encourages Responsible Healthcare Spending

  • Because employees may be more directly responsible for out-of-pocket costs (if paired with HDHPs), they tend to shop for cost-effective care, which can lower overall expenses.

Employee Satisfaction

  • Personalized reimbursements for healthcare needs can improve employee satisfaction and engagement.

  • Employees appreciate coverage for items that standard insurance may not cover, like certain therapies, wellness programs, or over-the-counter medical expenses.

These plans are most effective for medium-to-large employers with predictable claim patterns because the employer is taking on financial risk. They also require administrative oversight and compliance with IRS and ERISA regulations. At 360 Advantage, we handle everything from the documents to the enrollment to the administration.