What Capstone Plan is, per public materials
Capstone Plan is publicly marketed as a Section 125-based preventative care wellness program with employer FICA savings and tax-advantaged employee benefits. Publicly available materials describe Capstone Plan as combining an indemnity-based wellness benefit with a Section 125 cafeteria-plan election. We are not affiliated with Capstone Plan and have not audited their plan documents - the structural description here is based on Capstone Plan's publicly available marketing materials.
Side-by-side, structurally
| Aspect | EHP (SIMERP) | Capstone Plan |
|---|---|---|
| Tax structure (public description) | Section 125 + 105(b) reimbursement of incurred 213(d) expenses (SIMERP) | Section 125 + indemnity-based wellness payment (per public materials) |
| Payment trigger | Actually-incurred Section 213(d) qualified medical expense | Fixed payment on event participation |
| Relationship to IRS CCM 202323006 | Outside the scope of the memo | Within the scope of the memo if structured as publicly described |
| Plan document type | Self-insured medical expense reimbursement plan | Per public materials, insurance-policy + Section 125 combination |
| Customer service / member experience | Operated directly by EHP / Revive | Per public materials, partner network |
Capstone Plan column is based on publicly available marketing materials. Verify against the actual plan document before relying on this characterization.
Questions to ask the Capstone Plan sales team
- Is Capstone Plan structured as a SIMERP, or as a Section 125-funded indemnity wellness plan?
- How does Capstone Plan reconcile its tax treatment with IRS Chief Counsel Memorandum 202323006?
- Can I see the SPD and plan document for the actual product I would be purchasing?
- Does Capstone Plan offer indemnification for the employer if the IRS challenges the structure?
- What documentation supports the tax-free treatment of employee payments - per-expense, or per-event?
A vendor that can answer all of these questions in writing - with reference to the actual plan document and to IRS guidance - is a vendor worth taking seriously.
Where IRS CCM 202323006 fits
In 2023, the IRS Chief Counsel published Memorandum 202323006, which addressed fixed-indemnity wellness plans funded through Section 125 cafeteria-plan elections. The memo concluded that fixed-indemnity payments to employees under those structures should be treated as taxable wages - meaning the structure does not deliver the tax savings vendors had advertised.
The memo applies to fixed-indemnity-structured products. It does not apply to SIMERPs, which reimburse employees for actually-incurred Section 213(d) qualified medical expenses. The EHP program is structured as a SIMERP and is outside the scope of the memo. Whether Capstone Plan falls within the memo's scope depends on its actual plan structure.
When Capstone Plan might actually be the right choice
Same conditions as any Section 125 wellness plan choice: ultra-small employer, short time horizon, comfort with vendor hold-harmless terms, no public-sector or board-oversight exposure. For most mid-market and larger employers, the SIMERP structure is the more durable choice.
Common questions
An indemnity-funded plan pays the employee a fixed dollar amount when a triggering event occurs (a telehealth visit, a screening, a wellness activity). A SIMERP reimburses the employee for an actually-incurred Section 213(d) qualified medical expense. The IRS treats these differently - see Chief Counsel Memorandum 202323006 for the indemnity-structure position.
Not on the headline employer FICA savings figure - both products use the same Section 125 pre-tax election mechanism for the savings claim. The differences are structural (compliance posture) and operational (delivery network, member experience), not in the per-employee dollar projection.
Chief Counsel Memoranda are not binding precedent, and vendors who entered the market before 2023 have continued operating. The memo did meaningfully raise the audit-risk profile of indemnity-structured products - but it did not force them off the market.
Trademark notice. Capstone Plan is the trademark or trade name of its respective owner. We use the name nominatively to identify the product being compared. We are not affiliated with, endorsed by, sponsored by, or otherwise connected to Capstone Plan or its operators.
Affiliate disclosure. We are an independent affiliate of EHP / Revive Health and earn a referral fee when employers we introduce enroll. This page is not legal advice, tax advice, or audit advice. Always consult your own benefits counsel, CPA, and (where appropriate) labor counsel before adopting or replacing any benefits program.