Figures below are the plan provider's published estimates as of October 2026. They are ceilings, not averages. For a worked example on a real-size company, see How a 120-employee manufacturer could cut employer FICA. For your own figure, request a projection.
Frequently asked questions
What is a SIMERP?
A self-insured medical expense reimbursement plan. It sits under an employer's existing Section 125 cafeteria plan, is funded by one added pre-tax deduction, and, as the plan provider describes it, reimburses medical expenses employees incur and substantiate. A share of medical claims moves off the group health plan into this separate plan.
How does a Section 125 plan lower employer FICA?
Pre-tax deductions for qualified benefits under a Section 125 cafeteria plan are not FICA wages. The employer's 7.65 percent match (6.2 percent Social Security up to the annual wage base, plus 1.45 percent Medicare) does not apply to those dollars.
How much can an employer save per employee?
Up to $640 per enrolled W-2 employee per year, net of the admin fee, in the provider's estimates. That is a ceiling. Real proposals can come in lower, and only a payroll census sets the real figure.
What do you need from us to run the numbers?
Your number of full-time W-2 employees and your payroll provider gets a first look. A written projection needs a payroll census, which the plan team turns around in 7 to 10 business days.
Do we have to change our health plan, carrier or broker?
No. The health plan, the carrier and the broker stay the same. The structure adds one pre-tax deduction under the cafeteria plan you already have.
Which employees are eligible?
W-2 employees who work 30 or more hours a week and are enrolled in the employer's group health plan. All three are required.
Who is not eligible?
1099 contractors, part-time staff, and employees covered by a multiemployer or Taft-Hartley fund.
What about employees who do not pay into Social Security?
Staff outside Social Security, such as some public school employees, still pay the 1.45 percent Medicare share. They save roughly a fifth of the headline figure, not zero.
Is there a minimum group size?
Yes. The current minimum is 10 enrolled employees.
What does it cost the employer?
The provider's admin fee is $40 per enrolled employee per month, taken from the captured savings. In the provider's model, the company has no out-of-pocket cost.
What do employees get, and do they pay anything?
The provider estimates about $125 a month in added take-home pay per enrolled employee, with 92 percent average participation as of October 2026. Employees do pay a monthly fee, which is netted against their own tax savings.
How is this different from the wellness plans the IRS warned about?
In Chief Counsel Advice 202323006 (2023), the IRS Office of Chief Counsel concluded that fixed payments from certain wellness or indemnity arrangements, paid regardless of medical expenses, are taxable. The plan provider represents that this plan reimburses substantiated medical expenses instead. That is the key difference, but the tax treatment of these plans is still contested.
What are the risks?
The IRS could challenge any arrangement and recharacterize amounts as wages. Audit protection comes from the plan provider, and an errors-and-omissions policy may not cover an employer's own tax assessments, penalties or interest. Have your own counsel review the plan documents before you sign.
How long does it take?
A written projection arrives 7 to 10 business days after you send a payroll census. In the provider's estimates, savings begin about 30 days after signing, and ongoing HR work is about 5 to 10 minutes per payroll period.
Who are you, and how are you paid?
Section 125 Advisory Group introduces employers to a third-party plan provider. We are not a law firm, CPA firm or licensed insurance producer, and nothing here is legal, tax or accounting advice. The provider pays us a fee per enrolled employee, which is a real conflict of interest, and we disclose it.