How SIMERP turns payroll tax into savings — in plain English.
SIMERP isn't a loophole. It's a Self-Insured Medical Expense Reimbursement Plan (SIMERP) — also known as a WIMPER — built on decades-old IRS code (§105 and §125). Here's exactly how the savings are created — and why your employees' take-home pay never changes.
Employees elect a pre-tax wellness benefit under a §125 cafeteria plan. That election lowers taxable wages, which lowers the employer's — and the employee's — FICA. A §105 medical reimbursement then returns a matching, non-taxable amount, so take-home pay stays whole. The employer keeps the payroll-tax savings; employees gain free preventive care, prescriptions, telehealth, and wellness.
Three sections of the tax code, working together.
Cafeteria plan
Enables the pre-tax salary election that lowers taxable wages. This is what creates the FICA savings.
Medical reimbursement
Returns qualified medical expenses tax-free, offsetting the election. This is what keeps net pay unchanged.
Qualified expenses
Defines the wellness and medical services the plan covers. This is what keeps it compliant.
Educational summary — not tax advice.
From first call to first-payroll savings in about three weeks.
Briefing & eligibility
A 15-minute call confirms fit, shares the legal summary, and maps your payroll requirements.
Setup & compliance docs
Administrators prepare ERISA plan documents, employee notices, and substantiation logs — done for you.
Payroll integration
Pre-tax elections and non-taxable reimbursements are configured with your existing payroll — no carrier or broker change.
Go-live & verify
FICA savings begin on the first cycle; employees activate benefits in the app. Monthly reporting and quarterly reviews follow.
Three sources, one cost-neutral result.
SIMERP layers beside what you already run.
Employee take-home pay — unchanged.
Your carrier, network, broker, and plan design — unchanged.
ACA compliance maintained, and your HR team's workload stays minimal.
The three we hear most.
Is this a loophole?
No. It uses IRS §105/§125 — code that's been in place for decades — implemented with third-party legal opinions and audit-ready documentation.
Does net pay really stay the same?
Yes. The pre-tax election is offset by a non-taxable reimbursement, so employees' take-home pay is unchanged.
Do we switch carriers or brokers?
No. SIMERP is a supplemental layer; your existing coverage, network, and broker-of-record stay intact.
Ready to see it applied to your numbers?
Book a no-cost, 15-minute briefing and we'll model the savings for your exact headcount — no plan changes, no obligation.