IMERP Payroll Benefit Program – FAQ
What is SIMERP?
SIMERP stands for Self-Insured Medical Expense Reimbursement Program. It is an employer-sponsored benefit program that allows companies to reimburse employees for certain medical or wellness services on a tax-advantaged basis.
How does SIMERP help employers save on payroll taxes?
SIMERP pairs a pre-tax payroll deduction with a compliant medical expense reimbursement plan:
Employees make an approved pre-tax contribution through a Section 125 (“cafeteria”) plan.
Eligible medical or wellness services are then reimbursed to the employee under IRS Section 105 rules.
Because taxable wages decrease, employers may save on FICA payroll taxes, and in some states, on workers’ compensation premiums.
This is why SIMERP is often marketed as creating “payroll tax savings,” even though it is not a formal tax credit.
Is SIMERP compliant with IRS and ERISA regulations?
Yes—when properly structured and administered.
SIMERP must meet multiple regulatory requirements, including:
IRS Section 105 medical reimbursement rules
Section 125 cafeteria plan guidelines
ERISA plan documentation, plan administration, and nondiscrimination rules
HIPAA privacy requirements
CS Business Consulting partners only with administrators who maintain compliant plan documents, maintain required recordkeeping, and provide third-party oversight.
What expenses are reimbursable under SIMERP?
Reimbursable items vary by plan design but commonly include:
Preventive health screenings
Telehealth or wellness services
Approved medical consultations
Certain out-of-pocket medical expenses
Plans do not reimburse general cash, non-medical items, or disguised compensation.
Is SIMERP a good fit for all employers?
Not always. Best results occur when:
A business has W-2 employees enrolled in standard health insurance
Employees are likely to participate voluntarily
The employer wants to reduce payroll tax burden while offering additional benefits
Certain owners, highly compensated employees, or specific organizational structures may require special handling to maintain compliance.
CS Business Consulting evaluates every client’s eligibility before recommending implementation.
Why is there controversy around SIMERP?
Some professionals express concern about:
Plans that reimburse employees without providing legitimate medical services
Administrators who promise savings without robust compliance
Programs appearing to “double dip” by pairing pre-tax deductions with tax-free reimbursements
These concerns arise mostly from poorly designed or improperly administered versions of the program. A compliant SIMERP avoids these pitfalls through proper documentation, real services, and verified reimbursements.
What are the potential benefits for employers and employees?
Employers may see:
Reduced payroll tax liability
Lower workers’ compensation premium base (state-dependent)
Improved retention and recruitment
A meaningful, low-cost employee benefit
Employees may receive:
Additional wellness benefits
Lower taxable income
Tax-free reimbursement for eligible services
How does CS Business Consulting support SIMERP implementation?
We provide:
Eligibility analysis
Plan design recommendations
Coordination with compliant third-party administrators
Employee communication and onboarding materials
Ongoing compliance review
Our goal is to ensure clients gain the full advantages of the program—while avoiding the common compliance risks that other implementations may overlook.