How to Evaluate a SIMRP Vendor
What CCA 202323006 says, why WIMPER is only a marketing name, which savings claims need checking, and the questions every SIMRP provider should answer before you enroll.
7 min read
Short answer: What CCA 202323006 means for vendor claims, why WIMPER is only a marketing name, and the questions to ask before you enroll.
Why evaluating the vendor matters
A SIMRP (self-insured medical reimbursement plan) is a structure recognized in federal tax rules, principally 26 CFR § 1.105-11. How a provider designs, documents, and administers that plan is what determines whether the tax treatment holds. Marketing labels and headline savings numbers are not enough.
In Chief Counsel Advice memorandum 202323006 (2023), the IRS Office of Chief Counsel reviewed a wellness indemnity arrangement that paid fixed amounts for wellness activities whether or not the employee had unreimbursed medical expenses. It concluded those payments are included in income and count as wages for income tax withholding, FICA, and FUTA. The memo may not be cited as precedent, but it shows how the IRS views flat payouts with no medical expense behind them.
WIMPER is a marketing name
WIMPER is a marketing name some people use for wellness programs built on this structure. The IRS does not use the word "WIMPER" in its regulations. The IRS regulates self-insured medical reimbursement plans. A program sold under any marketing name still has to rest on a compliant SIMRP, usually paired with a Section 125 cafeteria plan. Read What Is a WIMPER Plan? and WIMPER vs. SIMRP.
Claims that need checking
Some presentations advertise very large per-employee savings (for example, figures around $1,119 per employee) or broad extras such as "30% workers' compensation savings." Treat those as claims to verify, not facts to accept. Ask:
- Is the number an estimate, a census calculation, or a documented result after implementation?
- Does it assume 100% participation of eligible full-time W-2 employees?
- Does it apply to private employers, to public employers whose staff pay Social Security, or to public employers whose staff do not?
- Is workers' compensation or any other non-payroll-tax savings backed by evidence for your organization, or is it a general marketing claim?
On this site, the working estimates are up to $590 per participating employee per year for private employers and for public employers whose employees pay Social Security, and up to $24 where public employees do not pay Social Security. Educational organizations also see an estimated $48 scholarship line per participating employee. Private schools and private charter schools follow the private-employer estimate, plus the scholarship line. All figures are estimates, not guarantees. A free payroll census uses your real payroll.
Questions every vendor should answer
- How are payments tied to real medical care or coverage under Section 105, rather than flat cash for an activity?
- How does the plan meet the nondiscrimination tests in 26 CFR § 1.105-11?
- How are employees without compliant coverage, or on federally subsidized Marketplace coverage, handled? (If some of your employees are in that situation, a SIMRP Advisor may be able to provide guidance so they can take part.)
- How are payroll coding and W-2 reporting handled for the Section 125 and Section 105 pieces?
- What plan documents, testing, and records will we receive?
- Are savings presented as estimates from a census, and are Social Security-paying and non-Social-Security groups estimated separately?
1099 contractors may not participate. Only Full time or full time equivalent W-2 employees with compliant health insurance are eligible.
What "compliant" looks like, in short
A compliant SIMRP pairs a Section 125 cafeteria plan with a Section 105 medical reimbursement plan, passes the 26 CFR § 1.105-11 nondiscrimination tests, checks each participant's coverage, and ties payments to qualified medical care or coverage. See How a Compliant SIMRP Works (and the IRS 2023 Wellness Plan Warning) and The Complete Guide to SIMRPs.
For an illustrative look at how a large public school district outside Social Security can appear in a census analysis, read the public school case study.
Who is eligible
- Your organization does not have to offer health insurance. Eligibility is decided employee by employee.
- Employees qualify with compliant health coverage from any source, such as an employer plan, a spouse's or parent's plan, their own paid coverage, TRICARE or state subsidies.
- Employees on federally subsidized marketplace coverage, or with no coverage, do not qualify on their own.
- If some employees need coverage, a SIMRP Advisor may be able to provide guidance so they can take part.
- There is no minimum number of employees. Every organization starts with a free, no-obligation payroll census that shows who is eligible.
Frequently asked questions
Is WIMPER an IRS term?
No. WIMPER is a marketing name. The IRS regulations address self-insured medical reimbursement plans under 26 CFR § 1.105-11.
What did the IRS say in CCA 202323006?
The IRS concluded that fixed wellness payments made without unreimbursed medical expenses are taxable wages for income tax withholding, FICA, and FUTA. The memo cannot be cited as precedent, but it shows the IRS view.
How should I treat large per-employee savings claims?
Ask whether the figure is an estimate, a census calculation, or a documented post-implementation result, what participation it assumes, and whether it applies to Social Security-paying or non-Social-Security groups.
Do we have to offer health insurance?
No. Each participating employee needs compliant coverage from any source. If some of your employees are in that situation, a SIMRP Advisor may be able to provide guidance so they can take part.
Who may participate?
1099 contractors may not participate. Only Full time or full time equivalent W-2 employees with compliant health insurance are eligible.
Keep reading
- The Complete Guide to Self-Insured Medical Reimbursement Plans (SIMRP)
- What Is a WIMPER Plan? (And Why It Depends on a SIMRP)
- WIMPER vs. SIMRP: Why the IRS Only Recognizes the SIMRP
- Is a WIMPER Plan Legal? What the IRS Actually Regulates
- How a Compliant SIMRP Works (and the IRS 2023 Wellness Plan Warning)
- SIMRP Public School Case Study
- Direct Primary Care for Schools and Businesses
- Direct Primary Care for Employers
Sources
Educational only, not tax advice. This page is a general explanation and is not tax, legal, or accounting advice. Every organization is different, so talk with a qualified tax professional about your plan.
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What Is a WIMPER Plan? (And Why It Depends on a SIMRP)
WIMPER is a marketing name, not an IRS term. Programs sold as WIMPERs depend on a compliant self-insured medical reimbursement plan, which is what the IRS regulates.
See if a compliant SIMRP fits your organization
There is no minimum number of employees. Start with a free payroll census to see what your organization could save. Any savings figure is an estimate.
New to SIMRPs? Read The Complete Guide to Self-Insured Medical Reimbursement Plans (SIMRP) for the full picture: how they work, who qualifies, and the IRS rules.
Written by Jake Parvu
Jake Parvu is a licensed financial agent and benefits educator with SIMRP Health & Wellness™. Licensed since 2007, his background includes serving Florida public school employees and working as a Certified Federal Retirement Consultant. He now educates public schools and private businesses on the proper use and administration of IRS Code Compliant Self-Insured Medical Reimbursement Plans.
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