In today’s economic climate — with rising labor costs, tax burdens, and retention challenges — doing more with less isn't just admirable. It's necessary.
That’s why a growing number of companies are turning to an overlooked but incredibly powerful tool: the Self-Insured Medical Reimbursement Plan (SIMRP) — especially when paired with a wellness incentive and/or preventative care component.
Let’s break down why this strategy is not just smart — it’s financially transformative.
💰 Reduce Payroll Taxes. Boost Employee Benefits. Curve Healthcare Costs.
A SIMRP is an IRS-compliant, employer-sponsored benefit plan under IRC §105, often layered with a Section 125 cafeteria plan. When structured correctly:
- Indemnity insurance components (like medical gap, supplemental health or hospital indemnity insurance) allow pre-tax deductions
Employees can receive a flat (“fixed”) tax-free reimbursements in the form of a benefit claim payment following a health related event creating a net-zero paycheck impact
- Enrolling in a wellness and/or preventative care plan does constitute a "health related event"
Employers can reduce FICA liability by thousands — without affecting employee take-home pay
- Average FICA liability is reduced by $1,104 per year, per participating employee
An employer with 100 employees could potentially reduce payroll tax expenses by over $62,000 annually (net fees), while improving benefit value and retention.
🧠 Invest in People Without Increasing Payroll
In a tight labor market, retention is everything. Traditional health plans are expensive, rigid, and often undervalued. But SIMRPs offer:
Customizable benefits based on your workforce’s actual needs
The ability to fund additional benefits that curve out of pocket medical expenses (e.g., medical gap insurance, hospital indemnity insurance, accident insurance, ect.)
- Reduce both employer and employee medical premiums without sacrificing coverage
- Additional coverage, such as medical gap insurance, allows an employer to reduce medical premiums (Average savings is over $550 a year per employee)
An immediate way to increase the perceived value of compensation without raising wages
According to Gallup and MetLife, high-value, flexible benefits reduce turnover by up to 40% and increase retention by over 59% — boosting margins and stability.
🔄 From Tactical Expense to Strategic Investment
This isn’t a workaround — it’s a smart reallocation of dollars you’re already spending. Instead of handing more money to the IRS, you redirect it into a benefit that your team actually uses and values.
It’s financially efficient, legally compliant, and culturally aligned with the leadership ethos we learned in the military: take care of your people, and they’ll take care of the mission.
🔧 Is It Complicated to Set Up?
Not when done right. That’s what we specialize in — turnkey SIMRP implementation. We help with:
Compliance documentation (ERISA, §105/§125)
Wellness design and integration
Employee communication and rollout
Ongoing administration or audit support
🏁 Final Thought: Veteran-Owned Doesn’t Mean Old-School
Being veteran-owned means we lead by example, move decisively, and build systems that work under pressure. SIMRPs aren’t a gimmick — they’re a mission-ready solution to rising costs, retention risk, and benefit fatigue.
If you're looking to protect your margins, support your team, and reinvest in growth, it’s time to put this strategy to work.
👉 Want to learn more or run the numbers for your company?
Let’s talk. We’ll show you how this strategy could save your business five to six figures annually — while strengthening your team and mission along the way.
Sources:
https://www.metlife.com/workforce-insights/boosting-benefits-understanding-and-use/
https://www.businesswire.com/news/home/20230912298968/en/Employees-Who-Want-Happiness-and-Stability-Cant-Overlook-Benefits-New-Study
https://www.gallup.com/467702/indicator-employee-retention-attraction.aspx
https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage
https://www.irs.gov/
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/retention-top-benefits-objective.aspx
https://www.shrm.org/topics-tools/news/benefits-compensation/employers-alter-benefits-to-attract-retain-employees-shrm-finds
https://www.irs.gov/government-entities/federal-state-local-governments/faqs-for-government-entities-regarding-cafeteria-plans
https://home.treasury.gov/news/press-releases
https://www.investopedia.com/terms/c/cafeteriaplan.asp
https://www.investopedia.com/articles/personal-finance/080816/section-125-plan-cafeteria-plan-how-does-it-work.asp
https://www.investopedia.com/ask/answers/111015/are-cafeteria-plans-subject-fica-erisa-or-futa.asp