The short answer is yes, but the "how" is where things get complicated, and often frustrating. Traditionally, using pre-tax benefit dollars for digital health tools has meant a confusing tangle of eligibility rules, reimbursement paperwork, and restrictive lists. But a structural shift is underway, moving from complex reimbursement models to integrated systems that automatically fund wellness through smarter benefits design. This evolution turns preventive health actions into direct, tangible value for employees. It's about time.
The Traditional Landscape: FSAs, HSAs, and Wellness Programs
Historically, employees have had three main channels to use benefits for apps and devices: Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), where the IRS decides what counts as a "qualified medical expense." Some health-monitoring devices qualify, but many wellness apps and general fitness trackers don't. A tracker or app can qualify when a licensed provider documents medical necessity for a diagnosed condition through a Letter of Medical Necessity (LMN), but that route adds its own paperwork, and most general wellness purchases never clear the bar. Congress keeps trying to loosen this. A provision in the House version of the 2025 One Big Beautiful Bill Act would have let HSA and FSA funds cover up to $500 a year in physical activity expenses, but it was cut before final passage, and the Personal Health Investment Today (PHIT) Act has not become law. That leaves out-of-pocket payments upfront, saved receipts, and reimbursement claims for anything that doesn't already qualify. Then there are employer-sponsored wellness programs, offering stipends or direct subscriptions to approved apps like Calm or Headspace. But those are often discretionary perks with limited budgets. Finally, some progressive health plans directly partner with digital health companies, offering subscriptions as a plan benefit, usually tied to condition management, like diabetes coaching apps. The common thread is friction. Employees face complexity, delayed value, and unclear eligibility, and that limits adoption and impact.
The Emerging Model: Integrated Health-to-Wealth Systems
The future is different. Integrated benefit systems remove friction entirely by directly connecting preventive actions, like using prescribed health apps or devices, to immediate, automatic funding. This is the core of the Health-to-Wealth category. An employee gets a personalized care plan that recommends a wellness app for mindfulness or a device for sleep tracking. Completing that action, such as using the app for a month, is automatically verified through secure, compliance-grade systems. That verification instantly credits real, spendable dollars to a dedicated account. Employers commit savings to employees' retirement accounts, so the same healthy behavior compounds into retirement wealth over time. The employee can then use those dollars to purchase FSA-eligible, health-supporting products from a curated marketplace. No reimbursement needed. In this model, using the app generates the funds to pay for it and other wellness tools, so the eligibility question never comes up. Incentives align: employees get rewarded for healthy behavior, and employers see higher engagement in preventive care, which cuts long-term claims.
Compliance and Design: The Foundation
For such a system to work, it has to be built on a solid compliance foundation. Key considerations include ERISA and plan documentation (the rewards must be part of a bona fide plan with clear legal documents), HIPAA and data security (verifying health actions requires strong protocols to protect PHI; patent-pending systems that use standardized preventive care codes can maintain compliance while enabling automation), and IRS guidelines (funding must comply with rules around constructive receipt and taxation). The most sophisticated systems handle this complexity automatically in the background. Employees just see a reward for a healthy action; employers get the compliance reporting and cost-saving analytics.
Questions for HR and Benefits Leaders
If you're evaluating how to modernize your benefits to cover wellness tech, ask these questions:
- Is it frictionless? Does the solution require employees to submit receipts and wait for reimbursement, or does it offer instant, automatic funding?
- Is it integrated? Are health recommendations, verification, rewards, and purchasing woven into a single, simple experience?
- Is it compliant by design? Does the vendor have expertise in ERISA, HIPAA, and IRS regulations, with a system built to maintain audit-ready records?
- Does it drive behavior? Does the model incentivize the use of wellness tools rather than just their purchase?
The ultimate goal is to move beyond viewing apps and devices as mere expenses. In a modern Health-to-Wealth system, they are tools for engagement that trigger a virtuous cycle: better health habits create immediate financial wellness, which reinforces continued healthy behavior, leading to lower healthcare costs and a more resilient workforce. It is a structural redesign of how healthcare value is created and delivered. WellthCare helps employers achieve this redesign with no disruption and no new out-of-pocket cost, delivering better care, lower claims, and higher retention. That is a change worth paying attention to.