SIMERPs
Self-Insured Medical Expense Reimbursement Plans
Unlock Tax Savings and Boost Employee Wellness with Managed SIMERP Plans
Transform Your Benefits Strategy – No Net Cost, Maximum Impact
Are you an employer tired of skyrocketing payroll taxes and healthcare costs?
Imagine reducing your FICA liabilities by $500–$900 per employee annually while providing your team with additional premium wellness benefits, such as telemedicine, mental health support, and preventive care.
At KAJMST, we've partnered with DCBG to deliver fully managed Self-Insured Medical Expense Reimbursement Plans (SIMERP). This innovative, IRS-compliant program converts tax savings into tangible employee benefits, enhancing retention, productivity, and overall satisfaction.
With our expert management, you get a turnkey solution that's safe, compliant, easy, and proven to work for businesses of all sizes.
Ready to explore? If you inquire about our SIMERP management services, we'll start with a no-obligation 15-minute initial conversation to assess your needs and show you the potential savings.
What is SIMERP and How Does It Work?
SIMERP is a self-insured wellness program created by the Affordable Care Act (ACA) that leverages pre-tax payroll deductions to fund supplemental health benefits.
Employees maintain their current take-home pay, while employers enjoy reduced payroll taxes and workers' compensation premiums. Key features include:
- Guaranteed-Issue Coverage: Access to telehealth, mental health counseling, chronic care management, and more.
- Tax Efficiency: Pre-tax deductions create FICA savings that directly fund benefits.
- Seamless Integration: Works alongside your existing ACA-compliant health plan.
Through our partnership with DCBG, KAJMST handles everything – from setup and compliance to ongoing administration – ensuring a hassle-free experience.
Why This Strategy is Safe, Fully Compliant, and Legally Supported
We understand compliance is non-negotiable. That's why our SIMERP management is built on rock-solid legal foundations, differentiating it from outdated or risky alternatives. Here's a straightforward overview:
1. Operates Within Established IRS Code: §§ 125, 105(b), and 213(d)
Our program strictly adheres to time-tested IRS provisions:
- IRC § 125: Enables employees to elect pre-tax salary reductions for qualified benefits through a "Cafeteria Plan."
- IRC § 105(b): Allows tax-free reimbursements for medical expenses incurred by employees.
- IRC § 213(d): Defines eligible "medical care" expenses, including telemedicine, mental health counseling, and health risk assessments.
This structure ensures tax savings and benefit enhancements without compliance risks.
2. Backed by a Formal Legal Opinion from a Tax Attorney
In June 2024, tax attorney Michael Hallock reviewed the DCBG plan and issued a comprehensive Tax Opinion Letter:
"It is my opinion the Plan creates an 'excepted benefit' to the employee. This excepted benefit means that, under IRC § 105(b), the election made by the employee to offset gross income for participation in the plan is proper. Additionally, the reimbursement to the employee from the employer does not create a taxable event."
— Michael Hallock, Esq., The Hallock Law Office, June 2024
The opinion confirms:
- Qualification as a Cafeteria Plan under IRC § 125.
- Valid reimbursements under IRC § 105(b).
- Services align with IRC § 213(d).
- Benefits are actuarially valued based on real medical pricing.
This isn't guesswork – it's precedent-backed assurance.
3. Differentiated from Problematic Plans (e.g., AFLAC, Fixed Indemnity Models)
Unlike past programs scrutinized by the IRS, our SIMERP avoids pitfalls:
- No fixed indemnity insurance, which triggered issues in prior cases.
- As noted in DCBG's response to the IRS Chief Counsel Memo (May 9, 2023):
"DCBG does not operate with a fixed-indemnity insurance policy... Our program provides a self-insured medical reimbursement plan (SIMRP), cafeteria plan document, and a preventative care management plan... Our benefits are 213(d) compliant and based on utilization, not cash rewards."
— DCBG Memo Response, 2023
We've designed it to exceed IRS standards, learning from industry lessons.
4. Robust Substantiation, Oversight, and White-Glove Administration
KAJMST and DCBG partner with The Capital Group, a nationally recognized third-party administrator, for end-to-end management:
- Plan documentation and annual updates.
- Payroll integration and contribution tracking.
- Eligibility verification and utilization monitoring.
- Reimbursement substantiation to maintain 213(d) compliance.
- Employee education, support, and dashboards.
This professional oversight creates a compliant, efficient system – far from DIY risks.
5. Proven Results with Real Companies and Ironclad Protection
Hundreds of businesses – from 10-employee startups to 1,000+ enterprises – use DCBG's SIMERP with zero IRS enforcement actions. Clean audits and positive outcomes speak volumes.
| Company Size | Annual FICA Savings (Per Employee) | Additional Benefits Funded | Retention Impact |
|---|---|---|---|
| 10-50 Employees | $500–$700 | Telehealth & Mental Health | Up to 20% Improvement |
| 51-200 Employees | $600–$800 | Preventative Care & Counseling | 25-30% Boost |
| 201+ Employees | $700–$900 | Full Wellness Suite | 30%+ Enhancement |
These results are real, protected by legal opinions and expert administration.
Make Compliance Your Competitive Edge
Innovative leaders ask tough questions – and we have the answers, backed by IRS code, legal expertise, and proven implementation. Stop overpaying taxes and start empowering your team with benefits they love.
If concerns linger, we're transparent: Request the full legal opinion, sample documents, or a call with DCBG's compliance team.
