Is a WIMPER Plan Legal? What the IRS Actually Regulates
The IRS rules apply to self-insured medical reimbursement plans. Here is what that means for any program sold as a WIMPER.
4 min read
Short answer: The IRS regulates self-insured medical reimbursement plans, not "WIMPERs." What the 2023 IRS memo means and what keeps a plan compliant.
The short answer
The IRS does not regulate "WIMPERs," because WIMPER is a marketing name, not a regulatory term. The IRS regulates the plan underneath it: a self-insured medical reimbursement plan (SIMRP) under 26 CFR § 1.105-11, typically paired with a Section 125 cafeteria plan. So the real question is whether the underlying SIMRP is compliant.
Start with the real structure: The Complete Guide to Self-Insured Medical Reimbursement Plans (SIMRP) explains the plan the IRS actually regulates.
What the IRS said in 2023
In Chief Counsel Advice memorandum 202323006, the IRS Office of Chief Counsel reviewed an arrangement in which employees paid for a fixed-indemnity wellness policy through a cafeteria plan and then received fixed payments for wellness activities, regardless of whether they had medical expenses. It concluded that payments made without any unreimbursed medical expense are included in income and are wages for income tax withholding, FICA, and FUTA. The memo states it may not be used or cited as precedent, but it is a clear signal of the IRS's view.
What keeps a plan on the right side of the rules
- Payments tied to real medical care or coverage, not flat cash for an activity
- Passing the nondiscrimination tests in 26 CFR § 1.105-11
- Checking that each participating employee has compliant coverage
- Written plan documents and records
- Correct payroll and W-2 coding
Learn how these pieces fit together in How a Compliant SIMRP Works (and the IRS 2023 Wellness Plan Warning).
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
- How a Compliant SIMRP Works (and the IRS 2023 Wellness Plan Warning)
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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Related articles
The Complete Guide to Self-Insured Medical Reimbursement Plans (SIMRP)
A plain-English guide to self-insured medical reimbursement plans: Section 125 and 105, eligibility, the 26 CFR § 1.105-11 nondiscrimination tests, compliant vs. non-compliant plans, payroll basics, and FAQs.
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.
WIMPER vs. SIMRP: Why the IRS Only Recognizes the SIMRP
SIMRP is the structure in IRS regulations (26 CFR § 1.105-11). WIMPER is a marketing name for programs that depend on it.
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.
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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