The CPA Journal’s “20 Questions” on SIMERP, SIMRP & WIMPER Plans: A 2026 Review

What Is a SIMRP or SIMERP?

The CPA Journal uses SIMRP to mean a self-insured medical reimbursement plan: a written employer arrangement for reimbursing covered medical expenses. The plan document should identify eligible participants, covered expenses, claim procedures, and reimbursement limits. Read the original definition in Question 1.

SIMERP is widely used in marketplace discussions, but marketing terminology is not a substitute for identifying the actual arrangement. The terms SIMRP and SIMERP are sometimes used differently. For this review, the important issue is the underlying plan structure, documents, reimbursement mechanics, and applicable law, not which acronym appears in a presentation.

A name does not establish that every component qualifies for favorable tax treatment. Identify separately the coverage, the funding, the employee election, the medical expense, and the payment.

What Is a WIMPER Program?

The original article describes a Wellness and Integrated Medical Plan Expense Reimbursement program, or WIMPER, as an approach combining wellness benefits, medical coverage, and a reimbursement arrangement. Its discussion links salary-reduction elections, accident and health benefits, and medical reimbursements. See The CPA Journal’s explanation and Question 7.

WIMPER is a descriptive program label, not a blanket statutory exemption. Combining components does not remove the need to evaluate each one. A wellness activity can be useful without making every reward a tax-free medical reimbursement.

How Does Section 105 Apply to a Self-Insured Medical Reimbursement Plan?

Section 105(a) supplies a general income-inclusion rule for certain employer-funded accident and health payments. Section 105(b) provides an exclusion for qualifying amounts paid to reimburse expenses incurred for medical care, subject to its conditions. The definition of medical care comes from Section 213(d).

The key questions are concrete: What expense was incurred? Who incurred it? Is it a covered medical-care expense? What amount remains eligible for reimbursement? Does the payment actually reimburse that expense, rather than reward participation or replace wages? An expense cannot be counted twice simply because two plan components use different names.

Treasury Regulation §1.105-2 says the exclusion applies to payments specifically reimbursing incurred medical-care expenses. It also says it does not apply to amounts a person would receive irrespective of whether medical expenses were incurred. The regulation contains language addressing payments solely reimbursing actual expenses even without proof of the amount, but it limits the exclusion to the actual expense. That language is not permission to exclude a cash payment when no medical expense exists.

Documentation, claim adjudication, and the applicable substantiation requirements matter. The precise process and timing should be reviewed for the actual arrangement; the 2023 proposal discussed below must not be presented as an already-effective final substantiation rule.

Section 105(h) adds nondiscrimination requirements for self-insured medical reimbursement plans, including eligibility and benefits rules. A favorable tax result requires more than a written plan title or a general assertion that testing was completed. Other benefits-law, eligibility, coordination, and administration requirements may also apply.

How Does Section 125 Fit Into a SIMERP or WIMPER Structure?

A Section 125 cafeteria plan can let eligible employees choose between taxable compensation and qualified benefits under a written plan. When the requirements are met, a salary-reduction election can fund qualifying benefits on a pretax basis. Section 106 may address the exclusion for qualifying employer-provided accident and health coverage.

These are different questions from the tax treatment of a later payment. An election that properly purchases coverage does not automatically make all cash paid under that coverage excludable. The funding rules, the benefit purchased, and the payment’s own legal basis must each be evaluated.

Section 105 and Section 125 can coexist in legitimate benefit structures. That does not mean every arrangement using both sections qualifies. Written elections, qualified-benefit restrictions, nondiscrimination, eligible participants, and actual operation need their own review.

The Question Everyone Comes Back To: Question 15

Question 15 is one of the reasons this article remains so important. It raises an issue that continues to drive discussion: how medical reimbursement, wellness participation, and actual medical expense interact.

The answer first compares a month with no medical expense to a month with no claims under major medical coverage. It then describes participation as the key to tax-free reimbursements, rather than the amount of services used or expenses incurred. Read Question 15 in its full context.

How We Read Question 15 Today

Begin with the distinction that gives the coverage comparison its value. A person can pay for qualifying accident and health coverage and have no claim during a particular month. The absence of a claim does not, by itself, undo the otherwise-valid treatment of the coverage. Coverage has value even when it is not used.

A separate cash payment requires a separate analysis. If that payment is described as a Section 105(b) medical reimbursement, identify the expense being reimbursed and explain why the payment fits the exclusion. The tax treatment of the premium or coverage cannot supply that answer by itself.

• Coverage is not reimbursement. Paying for qualifying coverage and receiving a claim payment are different transactions.

• Participation is not substantiation. Completing a wellness activity can establish participation without establishing an unreimbursed medical expense.

• A pretax contribution is not automatic tax-free cash. A contribution’s treatment does not establish a later payment’s exclusion.

For example, consider a teaching illustration, not a reported client result: an employee has qualifying coverage throughout a month but files no medical claim. That fact alone need not change the coverage’s treatment. Now add a cash benefit for completing an activity. Before describing it as tax-free reimbursement, ask what qualifying expense supports that cash payment. A service furnished at no employee cost may not leave an expense for the employee to reimburse.

Premiums can themselves be qualifying medical-care expenses in appropriate circumstances. That does not authorize reimbursing an already-excluded salary-reduction contribution a second time. Review the particular premium, who bore its cost, the funding route, and the plan’s rules. Similarly, the fact that a payment comes from an insurance policy does not settle its tax treatment without examining the policy and how it was funded.

The practical issue is not whether the employee is healthy, whether the program has a wellness label, or whether services were theoretically available. It is what legal exclusion applies to the actual payment on the actual facts.

This reading preserves the useful coverage point while adding the context needed for reimbursement language. It does not establish that every component of the broader framework fails, and it does not attribute a current position to the original authors.

What Does IRS CCA 202323006 Actually Say?

Chief Counsel Advice 202323006 was dated May 9, 2023, and released June 9, 2023. It addresses a particular employer-provided fixed-indemnity wellness arrangement funded through pretax salary reduction, not every plan sold under a SIMERP or WIMPER name.

In the described facts, employees pay a $1,200 monthly premium through a Section 125 cafeteria plan and can receive a $1,000 monthly wellness benefit. The payment is not tied to an unreimbursed medical expense supporting that benefit. The advice considers the payment’s income and employment-tax treatment on those facts.

The IRS concludes that the described wellness indemnity payments are includible in gross income and are wages for FICA, FUTA, and federal income-tax withholding. The absence of a qualifying unreimbursed medical expense is central to the analysis. The memo is not an approval or rejection of a named administrator.

The advice is nonprecedential: the document states that it may not be used or cited as precedent. That limits its legal role, but it does not make its reasoning irrelevant to evaluating an analogous design. Read the actual facts and compare them carefully, rather than using the memo’s number as a slogan.

What CCA 202323006 Does Not Say

• It does not invalidate every Section 105 plan.

• It does not conclude that every arrangement marketed as a SIMERP is taxable.

• It does not say Section 105 and Section 125 can never coexist.

• It does not eliminate legitimate Section 105(b) medical reimbursement.

Those limits matter in both directions. The memo should not become a universal “illegal” label, and its nonprecedential status should not become a universal reassurance. A different conclusion requires a meaningful difference in facts or applicable authority, not just a different product name.

What Has Changed Since The CPA Journal Article Was Published in 2021?

The original article belongs to its publication context. Several later developments add to the questions readers should ask:

• 2023 IRS analysis. CCA 202323006 examines a later fixed-indemnity wellness fact pattern and separates coverage from the treatment of payments. Read the IRS advice.

• July 2023 proposed regulations. The joint proposal included changes to Treasury Regulation §1.105-2 addressing medical-expense reimbursement and substantiation. A proposed rule is not the same as an effective final rule. Read the proposal.

• April 2024 final-rule context. The agencies did not finalize those proposed §1.105-2 changes in that rule. Treasury and the IRS said no inference should be drawn from the deferral and that compliance efforts regarding existing Section 105(b) responsibilities would continue. Read the final rule.

• 2026 state legislation. South Carolina and West Virginia enacted wellness-reimbursement administrator frameworks. Their definitions and obligations add state-specific questions to the review. Read South Carolina’s act. Read West Virginia’s code.

The lesson is not that a proposal became law, or that deferral approved every existing design. Read existing law, later analysis, and state requirements as distinct sources. Our companion article “The Rule Treasury Did Not Finish, and Why It Is Still the Test,” examines that sequence in more detail.

South Carolina and West Virginia Changed the State-Law Conversation

Question 5 of the 2021 article describes WIMPER programs as subject to federal law rather than state insurance regulation. A 2026 review needs to qualify that statement with the new state environment. The relevant question is now whether the particular administrator and arrangement fall within a state statute’s definitions, not whether a marketing acronym carries an exemption.

South Carolina’s H.4305 became Act 215 and took effect on May 19, 2026. Title 38, Chapter 105 defines covered wellness reimbursement programs and requires covered administrators to obtain a license before selling, offering, marketing, promoting, or operating them. It also addresses records, financial information, bonding, representations, and other responsibilities.

West Virginia’s Chapter 33, Article 64 uses its own definitions for wellness reimbursement programs, arrangements, or benefit plans. It includes language about wellness-related benefits offered through insurance or similar benefit models. Do not assume the two states cover precisely the same arrangements. Compare the West Virginia definition.

Both frameworks address compliance representations and defense-and-indemnification obligations when a covered program results in a taxable event. South Carolina additionally requires a plain-language disclosure before enrollment and at renewal that discusses evolving federal tax guidance and recommends independent advice. These are obligations to examine, not a promise that every employer loss is covered or that every administrator has the financial ability to perform.

A state license is not an IRS tax determination. It does not resolve every federal tax, ERISA, or benefits-law question. Applicable exemptions, preemption issues, licensing status, and contract obligations should be evaluated with appropriate counsel.

For the broader state-law discussion, read “Two States Just Licensed Our Industry. Here Is the Standard.”

Does SIMERPU Agree With The CPA Journal Article?

Broadly, we believe the article remains an important and valuable part of the SIMERP/WIMPER conversation. Sections 105, 106, 125, and 213(d) provide legitimate components of employer health-benefit and medical-reimbursement structures. Their presence in a proposal does not establish that the proposed arrangement satisfies them.

Where SIMERPU adds to the conversation is by examining how later IRS analysis, Treasury regulations, state legislation, and actual plan administration affect the way particular statements should be understood today. That is not a blanket rejection of the original work or an endorsement of every described outcome.

Read the original. Read the later sources. Test the actual structure. That is what useful professional education is supposed to do.

The SIMERPU Test: Show Us the Structure

Before relying on a tax-savings illustration or repeating a claim, organize the evidence behind these ten questions:

1. What is the Section 125 election? Identify the written plan, eligible participant, election, and qualified benefit.

2. What is being purchased? Separate coverage, medical services, administration, and any cash-benefit component.

3. What does Section 106 apply to? Identify the accident and health coverage and the basis for its exclusion.

4. What does the Section 105 plan reimburse? Read the actual plan terms and claim procedure.

5. What Section 213(d) expense exists? Identify the expense, the person who incurred it, and any amount already paid or reimbursed elsewhere.

6. How is it substantiated? Ask what evidence is collected, when it is reviewed, and how duplicate reimbursement is prevented.

7. Who adjudicates it? Identify who decides claims and handles denials, appeals, and corrections.

8. What enters payroll? Trace deductions, benefits, exclusions, taxable amounts, and reporting responsibilities.

9. Why is it excluded? Identify the authority for each amount, rather than assuming all transactions share one result.

10. What state law applies? Check actual statutory definitions, administrator obligations, and relevant jurisdictional issues.

This is an educational review framework, not a certification of compliance. The answers may identify a useful next step, a missing document, or a reason not to proceed.

Frequently Asked Questions About SIMERPs, WIMPERs and The CPA Journal Article

Is a SIMERP legal?

An acronym does not determine legality. Legitimate employer health-benefit and reimbursement structures exist, but a particular arrangement must satisfy the tax, benefits, employment, and state-law requirements that apply to its design and operation. This review does not approve an employer’s program.

What is a Section 105 self-insured medical reimbursement plan?

It is a written employer reimbursement arrangement whose qualifying medical-care payments may fall within Section 105(b). Self-insured arrangements also need to consider Section 105(h) nondiscrimination and other applicable requirements. A plan document alone does not establish the treatment of every payment.

What is the difference between SIMRP and SIMERP?

The CPA Journal uses SIMRP for self-insured medical reimbursement plan. SIMERP is also used in the marketplace, sometimes with different descriptions. Look past the label to the plan terms, funding, covered expenses, claim mechanics, and applicable law.

What is a WIMPER program?

The original article describes a Wellness and Integrated Medical Plan Expense Reimbursement program combining wellness, medical-benefit, and reimbursement components. It is a descriptive approach, not a blanket federal or state exemption.

Can Section 105 and Section 125 be used together?

Yes, the provisions can operate within legitimate benefit structures when their respective requirements are satisfied. A valid pretax election does not, by itself, establish that a subsequent cash payment is tax-free.

Are SIMERP reimbursements tax-free?

Not automatically. A payment’s exclusion depends on the applicable authority and facts, including whether it is an eligible medical reimbursement and whether its conditions are met. Calling cash a reimbursement does not establish its treatment.

What is IRS CCA 202323006?

It is nonprecedential Chief Counsel Advice addressing a specific employer-provided fixed-indemnity wellness arrangement funded through pretax salary reduction. On the described facts, the IRS concludes that the wellness payments are income and wages.

Did CCA 202323006 make SIMERPs illegal?

No. The advice addresses a fact pattern and its tax consequences, not the legality of every arrangement using a SIMERP label. Its reasoning remains relevant when evaluating a similar structure.

Do SIMERPs require medical expense substantiation?

A Section 105(b) exclusion requires an actual qualifying expense and a payment that fits the reimbursement rules. The applicable substantiation and administration requirements depend on the arrangement. The regulation’s limited “without proof” language does not authorize cash exclusion where no expense exists. Ask the adviser and administrator to explain the governing process.

Are SIMERPs regulated by states?

State law can matter. Some states regulate administrators or defined wellness-reimbursement arrangements; insurance components and other activities may involve separate requirements. Applicability depends on statutory definitions and the actual facts, not just the program name.

What changed for SIMERPs in South Carolina and West Virginia in 2026?

The states enacted wellness-reimbursement administrator frameworks with licensing and other obligations for covered arrangements. The definitions differ. State licensing does not establish federal tax exclusion or replace an employer-specific legal review.

Continue the SIMERPU Learning Path

Use these resources to keep the source material, regulatory context, and practical preparation connected:

• The Rule Treasury Did Not Finish — proposed rules, existing law, and the 2024 deferral.

• South Carolina and West Virginia — the new administrator frameworks.

• Professional Roadmap — the permanent free resource experience; download access is still being prepared.

• Article Reviews — independent summaries and source-based commentary.

• Resources — practical questions and existing educational material.

• Case Assistance — educational scope and the assistance-request process; check the page for current intake availability.

• Certification — the planned educational pathway, not program approval.

Scope and Limitations

This is a focused educational companion review, not an exhaustive legal update, tax opinion, or determination about any administrator or employer. We distinguish the original authors’ discussion from SIMERPU’s analysis and distinguish statutes, existing regulations, proposed rules, and nonprecedential IRS advice. Laws and guidance can change; check the current sources and involve qualified advisers for an employer-specific decision.