If your organization already invests in executive physicals or enhanced health benefits for your top leaders, you’re doing something smart. These programs keep your top leaders healthy, focused, and performing at their best1 – while supporting retention and continuity across the business. But one thing many companies discover over time is that how they fund […] The post Executive Physicals Without the Tax Headaches: How to Simplify Executive Health Compliance appeared first on ArmadaCare.
If your organization already invests in executive physicals or enhanced health benefits for your top leaders, you’re doing something smart. These programs keep your top leaders healthy, focused, and performing at their best1 – while supporting retention and continuity across the business. But one thing many companies discover over time is that how they fund these benefits matters just as much as offering them in the first place. The structure behind your executive health program can have a meaningful impact on tax exposure, compliance risk, and the workload placed on internal teams.2
Many employers still fund executive physicals through direct contracts with facilities or by reimbursing executives directly. While this approach may seem simple, it often creates hidden challenges that lead to unintended costs, administrative complexity, and avoidable risk for both the company and its leaders.
The Tax & Compliance Trap of Direct-Contract Executive Physicals
A big issue for organizations using direct contracts is how the Internal Revenue Service (“IRS”) views these programs. Depending on how an employer pays for an executive physical, the value of that exam can be treated as taxable income to the executive. That means potential implications such as:
- Income reporting requirements
- Tax withholding obligations
- Gross-ups to keep the executive financially neutral
- Additional administrative steps to document compliance
On top of that, employer-funded arrangements that sit outside a fully insured structure may raise IRS Section 105(h) nondiscrimination concerns. In this area, unintended missteps can create penalties or compliance exposure.
Operationally, direct contracts also shift most of the burden onto HR and Finance. Your teams are responsible for selecting facilities, managing vendor relationships, checking service quality, confirming invoices, troubleshooting scheduling issues, and maintaining a consistent experience. Over time, this adds up, especially as expectations around executive health evolve.
KPI Health: A Smarter, Fully Insured Model That Removes the Risk
KPI Health was built to take these challenges off your plate. As a fully insured, ACA-excepted executive health solution, it offers a clean, compliant, and scalable way to support executive well-being – without the tax uncertainty and administrative complexity of direct-contract programs.
Clear Tax Advantages Without the Guesswork
Because KPI Health is delivered as a supplemental health insurance policy, it avoids the tax pitfalls of stand-alone reimbursements. Key advantages include:
- Employer-paid premiums are generally tax-deductible.*
- Benefits provided through the plan are non-taxable to executives.*
- Section 105(h) nondiscrimination rules do not apply.
Your executives receive the benefit as intended—without needing to claim the value as income or navigate complicated tax reporting. And your organization stays out of the “gray zone” that direct arrangements often create.
Significant Administrative Relief for HR and Finance
KPI Health also removes the internal workload that direct contracts place on your teams. There is no need to:
- Vet or monitor facility quality
- Manage multiple facility relationships
- Review invoices or chase down billing discrepancies
- Resolve logistics issues
All of this is handled for you. KPI Health’s structure allows HR and Finance to shift away from manual program oversight and focus on more strategic responsibilities.
A Modern, High-Value Executive Experience
Today’s leaders expect more than an annual exam. They want flexibility, personalization, and support that extends beyond the physical itself. KPI Health delivers this through:
- Nationwide guidance to a broad range of vetted executive physical programs
- TopDoc Connect, which navigates leaders to top specialists for follow-up care
- Connect & Thrive, a confidential mental health and well-being resource
- Supplemental health insurance coverage for wellness treatments, follow-up care, and mental health services typically excluded from primary health plans
By supporting executives before, during, and after the physical, KPI Health transforms the traditional one-day exam into a year-round health advantage.
A Tax-Smart, High-Impact Solution for Modern Organizations
Executive health benefits should strengthen performance—not create tax complications or administrative strain. KPI Health offers a fully insured, compliant alternative that protects both your leaders and your organization. By shifting away from direct-contract arrangements, companies gain a program that is easier to manage, more flexible for executives, and far better aligned with long-term organizational success.
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1Return on investment of workplace-based prevention interventions: a systematic review; European Journal of Public Health, 2023
2Brown & Brown, 2022
*This is not local, state or federal tax advice. This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied on for tax advice. Each person and each company is unique with their own facts and circumstances. It is recommended that you seek the independent counsel of a professional tax adviser.
The post Executive Physicals Without the Tax Headaches: How to Simplify Executive Health Compliance appeared first on ArmadaCare.
