SIMRP Case Study: Public School District Outside Social Security

At a glance: Riverglen Consolidated Independent School District

Riverglen Consolidated Independent School District is a fictional name used for this illustration. The underlying census reflects a Texas public school district whose employees do not pay Social Security (Medicare tax still applies). Because Social Security tax is not in play for this workforce, the employer savings estimate is much smaller per employee than the up-to-$590 estimate used for private employers and for public employers whose staff do pay Social Security.

Census detail	Figure
Employees in census	14,208
State	Texas
Social Security status	Employees do not pay Social Security
Admin fee (program)	$114
Employee allotment / month (high)	$313.56
Employee allotment / month (low)	$0.00
Employee allotment / month (average)	$61.74
Employer admin fee	$15
Average estimated savings / employee / year	$23.12 (estimate)
Estimated employer savings / year	$328,547.50 (census-based estimate)

All savings figures are estimates derived from the census analysis. They are not a guarantee and are not claimed as measured post-implementation results. Educational organizations may also see an estimated $48 scholarship line per participating employee; confirm scholarship treatment for your district in a free payroll census. Private schools and private charter schools follow the private-employer estimate (up to $590), plus the scholarship line.

Why non-Social-Security status changes the estimate

Where public employees pay Social Security, the site's working estimate is up to $590 per participating employee per year for private employers and for public employers whose staff pay Social Security. Where they do not pay Social Security, only Medicare-related payroll tax savings are typically in scope, and the working estimate is up to $24 per participating employee per year. This census's average of $23.12 per employee per year sits in that non-Social-Security range.

A compliant SIMRP is a self-insured medical reimbursement plan under 26 CFR § 1.105-11, usually paired with a Section 125 cafeteria plan. In 2023, IRS Chief Counsel Advice memorandum 202323006 warned that fixed wellness payments made without unreimbursed medical expenses are taxable wages. A compliant plan ties payments to real medical care or coverage and passes the nondiscrimination tests.

Eligibility (applies to every organization)

1099 contractors may not participate. Only Full time or full time equivalent W-2 employees with compliant health insurance are 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 of your employees are in that situation, 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.

Illustrative monthly paycheck example (Social Security-paying employee)

Figures below are for one monthly paycheck (12 pay periods per year). Arithmetic is shown so you can follow each step.

Line item	Before SIMRP	With SIMRP
Gross pay	$3,288.46	$3,288.46
Major Medical	$500.00	$500.00
Program premium	—	$1,173.00
Taxable income	$2,788.46	$1,615.46
Federal withholding	$334.62	$193.86
Social Security	$172.88	$100.16
Medicare	$40.43	$23.42
State withholding	$139.42	$80.77
Total taxes	$687.36	$398.21
Net pay subtotal	$2,101.10	$1,217.25
Reimbursement	—	$1,173.00
Admin fee	—	$89.00
Final net pay	$2,101.10	$2,301.25

• Before: gross $3,288.46 − Major Medical $500.00 − taxes $687.36 = net pay $2,101.10.
• With: taxable wages fall after the $1,173.00 program premium, so total taxes fall to $398.21; net pay subtotal is $1,217.25.
• Then: $1,217.25 + reimbursement $1,173.00 − admin fee $89.00 = final net pay $2,301.25.
• Illustrated pay increase in this example: $200.15 ($2,301.25 − $2,101.10). This is one illustration only, not a typical or promised amount for every employee.

What this page does not claim

This page does not claim that the census estimates above were realized after go-live, that every employee gets a larger paycheck, or that a SIMRP produces outcomes such as lower human-capital expense, a better health-plan loss ratio, improved renewals, healthier employees, higher engagement, or higher productivity. Those claims need separate evidence and are not part of this case study.

Related reading

• SIMRP for K-12 schools
• SIMRP plans for schools
• How to evaluate a SIMRP vendor
• How a compliant SIMRP works (and the IRS 2023 wellness plan warning)
• Complete guide to SIMRPs
• Broker Resource Hub

Sources

• 26 CFR § 1.105-11, Self-insured medical reimbursement plan (Legal Information Institute, Cornell Law School)
• IRS Chief Counsel Advice memorandum 202323006 (IRS.gov, PDF)