What is a SIMERP?
A Self-Insured Medical Expense Reimbursement Plan — the IRS-recognized structure that powers The Employee Wellness Plan.
Self-Insured Medical Expense Reimbursement Plan
An employer-sponsored plan that reimburses employees for real medical care on a tax-free basis. Because qualifying reimbursements are excluded from wages under the tax code, both the employer and the employees stop paying FICA payroll taxes on those dollars. The savings fund the care, so the program runs at no net cost.
"Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan aren't wages and aren't subject to social security, Medicare, and FUTA taxes, or federal income tax withholding."
— IRS Publication 15 (Employer's Tax Guide)
The IRS named it first
This is not a loophole someone invented last year. The IRS calls the category a Self-Insured Medical Reimbursement Plan, named directly in IRS Publication 15 — the Employer's Tax Guide, revised every year. The underlying statutes — IRC Sections 105, 106, 125, and 213(d) — have been in place for decades. What changed is that the structure once reserved for Fortune 500 benefits departments is now available to businesses with W-2 employees.
What a SIMERP is not
It is not insurance. There is no carrier, no policy, and no premium. Your existing group health plan and broker relationship stay exactly where they are — a SIMERP sits alongside them. It is also not a cash wellness gimmick. The IRS has warned about programs that pay employees cash whether or not any medical care happens. A compliant SIMERP is the opposite: every reimbursement is tied to actual, documented medical care delivered by licensed physicians.
What makes it compliant
Four things, all documented: reimbursements are tied to actual medical care as defined in IRC Section 213(d); every interaction is documented with CPT and ICD codes, creating an audit trail; the benefit is valued by independent professional actuaries; and the plan runs on written documents — an adoption agreement and a summary plan description.
Why employers say yes
Three reasons, in the order most owners rank them: the FICA savings are immediate — up to $640 per enrolled employee per year; the program costs nothing on net because the savings fund it; and employees get real medical care with zero copays or deductibles.
The four compliance tests
Every compliant SIMERP must satisfy all four. These are the dividing lines the IRS actually applies.
How EWP uses the SIMERP structure
The Employee Wellness Plan is built on the SIMERP framework — the same IRS-recognized structure described above. EWP handles the compliance architecture, actuarial valuation, plan documentation, and ongoing administration so your business captures the FICA savings without the complexity. You get the benefit of decades of established tax law, fully managed.