Inside SIMERP: How Self-Insurance Redefines Medical Reimbursement

Posted On: December 26, 2023

Business owners often seek innovative solutions to optimize their medical reimbursement strategies. For example, you might consider a self-insured medical reimbursement program (SIMERP). When you understand the significance of SIMERP and how it differs from traditional medical reimbursement models, you can see how it is revolutionizing the healthcare coverage market.


Self-Insured Medical Expense Reimbursement Program (SIMERP) is an IRS-qualified workplace program that allows businesses to provide voluntary benefits to employees at no cost to employers with no reduction in employees’ take-home pay. 

Employees will be able to utilize a monthly tax allotment for their own health and wellness benefits. 

Employers will save approximately $500 a year per employee on payroll taxes. In addition, California employers will see an overall 20% reduction in their workers’ compensation costs by reducing the gross wage footprint of their employee’s gross wages. 

This is a tax-qualified Self-Insured Medical Reimbursement Plan with a wellness focus that uses tax advantage provisions under the Internal Revenue Service codes “Section 125 Cafeteria Plan and codes 105, 106, and 213(d)” and ACA wellness rules.

SIMERP allows employees to directly fund healthcare expenses and benefits with their own tax savings. This approach gives business owners greater longevity and lower turnover for their employees. 

Businesses get the autonomy to tailor healthcare plans to meet the specific needs of their employees, improving employee satisfaction and promoting a healthier workforce. In addition, it offers risk management benefits because businesses have greater control to proactively manage and mitigate their financial risks associated with healthcare claims.

SIMERP will provide preventative care, benefits, and institutional loyalty for employees utilizing the program. 

Advantages of SIMERP in Medical Reimbursement

The key advantage of self-insured medical reimbursement is its cost-effectiveness. By utilizing this IRS, ACA, ERISA, and HIPPA-compliant program, employees receive additional benefits while still taking home the same paycheck. Employers get a yearly payroll tax reduction per employee and a reduction in workers’ compensation costs (California employers).

Tailoring healthcare plans to meet specific needs is another compelling advantage. Employers can design benefit packages that align with their workforce’s unique demographics and preferences. This customization provides a sense of employee empowerment and satisfaction.

Setting Up a SIMERP

Establishing a self-insured medical reimbursement program is easy. You have the option to view our PowerPoint presentation via Zoom call, and we can answer any additional questions you may have. Once you decide to go forward, simply provide an employee census and a weekly, bi-weekly, or monthly payroll report we can get started. 

We will construct a mock-payroll run prior to implementation. This will allow you to see exactly what effect the program will have on your business. 

This program is a great fit for companies with 10 or more full-time employees. Though it is a national program, it is best utilized in California due to the way workers’ compensation policies are audited in the state. Most states audit workers’ compensation policies based on the net wages as opposed to gross wages. Because California audits based on gross wages, there is a huge workers’ compensation savings on the table to the tune of 20% or more. 

Employees will then be contacted by our benefits specialist who will educate them on the potential benefits available to them at no cost. Employees can choose from an entire suite of benefits including: Critical Illness, Life Insurance, Dental Insurance, Accident & Disability. 

Implementing a self-insured Medical Expense Reimbursement Program won’t take more than 3-4 weeks and employers are under no obligation to switch providers or payroll companies. This IRS-compliant program is AT NO COST to the employer and does not reduce employee take-home pay.

Compliance Requirements

Legal considerations play a crucial role in successfully implementing a self-insured medical reimbursement program. Businesses should stay informed about the regulatory landscape and ensure compliance with relevant laws. While self-insured medical reimbursement programs offer numerous benefits, understanding the legal requirements will help business owners navigate potential pitfalls and ensure a seamless transition to self-insurance.

A self-insured medical reimbursement program represents a transformative approach to medical reimbursement, empowering business owners with greater control, customization options, and cost advantages. By understanding the fundamental principles, benefits, and steps involved in setting up a SIMERP, business owners can make informed decisions to revolutionize their healthcare coverage strategies. With the support of experienced partners like Western Republic Insurance, the journey towards self-insurance is easier than you might think.

About Western Republic

Locally owned and operated since 2009, Gabe Stubin of Western Republic Insurance Services has delivered quality insurance solutions to individuals in Huntington Beach, California, for over 17 years. Specializing in Commercial Business insurance coverage, our team of knowledgeable insurance professionals is committed to helping you find a policy that fits your needs. We focus on providing individualized attention and quality customer service to create an experience that’s difficult to find in today’s market. At Western Republic Insurance Services, we’ll work with you to ensure that you and those you care about most are protected.

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