What the IRS Has Actually Said—And What It Hasn't
The term "double dip" has become a catch-all dismissal for any wellness program that provides FICA savings. But the actual IRS guidance is far more nuanced. Here are five facts that most commentators miss—facts that fundamentally change the compliance analysis.
Every CCA addressing wellness programs—201622031, 201703013, 201719025, and 202323006—analyzes structures where premiums are funded entirely through pre-tax salary reduction.
The IRS has never issued guidance challenging dual-premium structures where wellness premiums are paid with after-tax dollars. The distinction isn't semantic—it's the core of the tax analysis.
"If the premiums for the policy are paid by the individual on an after-tax basis, then the benefits received are not subject to tax."
— CCA 201703013
In a properly structured dual-premium program:
The wellness benefits come from Policy 2—the one funded with after-tax employee dollars. This is fundamentally different from the structures analyzed in the CCAs, where a single pre-tax funded policy pays wellness benefits.
The "double dip" label simply doesn't apply when there's genuine after-tax premium funding for the wellness policy.
This is perhaps the most misunderstood point. The IRS CCAs do NOT challenge the employer's FICA savings from pre-tax premium deductions.
Section 125 cafeteria plans have provided FICA exclusions for qualified benefits since 1978. This is codified in IRC §3121(a)(5)(G) and has never been disputed. The "double dip" concern is about the employee-level taxation of wellness benefits—not the employer FICA mechanism.
Even in CCA 202323006, the IRS didn't challenge the employer's FICA savings from the pre-tax premium. They challenged whether the wellness benefits were taxable to the employee.
Every CCA includes this disclaimer: "This Chief Counsel Advice may not be used or cited as precedent."
This isn't boilerplate—it's statutory. Under IRC §6110(k)(3), CCAs:
The dual-premium structure relies on IRC §104(a)(3), Treasury Regulation §1.104-1(d), and Revenue Ruling 69-154—all of which have full precedential weight and have been established law for decades.
In 2024, Treasury included language in proposed ICHRA regulations that would have applied CCA-style reasoning to wellness programs. Notably, these provisions were withdrawn before finalization.
Treasury has repeatedly requested Congressional action to change the tax treatment of after-tax funded benefits. The fact that they're asking Congress to change the law is an acknowledgment that current law supports the after-tax premium exclusion.
"The proposal would not affect the treatment of benefits under policies purchased with employee after-tax dollars."
— Treasury Greenbook (March 2022)
Congress has not enacted these proposals despite multiple requests—suggesting legislative support for the current tax treatment.
The "double dip" concern is valid for structures that try to get pre-tax treatment on premiums AND tax-free treatment on benefits from the same single policy.
But it doesn't apply to dual-premium structures that maintain clear separation: pre-tax funding for qualified benefits, after-tax funding for wellness benefits. Each policy operates under its own legal framework, and the after-tax funded wellness benefits are properly excludable under §104(a)(3).
Anyone dismissing all FICA savings programs as "double dips" is conflating two very different structures—and missing the distinction that makes compliant programs possible.
The PTE Gold Book provides comprehensive analysis of all IRS guidance, the complete CCA history, and detailed compliance frameworks for dual-premium structures.