reducing salary and paying health insurance instead

Client pay an employee 40k per year.

Employee pays their own health insurance

Is there anything precluding my client from reducing the salary down to 35k

and in exchange, giving the employee 5k tax free for reimbursement of their healthcare?

the employee would be delighted to do this.

No...LOTS of discussion on this. Please search for it.

"No, you can't do that", or "No, nothing precluding you from doing that"? I suspect the former is correct.

Thanks for clarifying, Jake.

No, you can't do that. It would clearly be a noncompliant employer payment plan.