For CFOs – SIMRP

Chief Financial Officer

HOW SIMRP COMPARES TO ERC

Many financial leaders became familiar with IRS-recognized payroll opportunities through the Employee Retention Credit, commonly known as ERC.

The Employee Retention Credit rewarded qualifying employers for retaining employees during a specific period of economic disruption.

SIMRP — the Self-Insured Medical Reimbursement Plan — operates differently, but it follows a familiar principle: properly structured IRS-recognized provisions can create meaningful financial value for both employers and employees.

ERC addressed a past period.

SIMRP is designed to create ongoing value moving forward.

ERC was tied to a historical event.

SIMRP is tied to the employer’s continuing payroll and benefits structure.

ERC ended.

Payroll costs did not.

Employee benefit costs did not.

Workforce cost pressures did not.

For CFOs, the important question is not whether SIMRP is another ERC. It is not.

The better question is whether the organization has an opportunity to reduce recurring payroll-related costs through a structured, compliant, employer-sponsored benefit strategy.

FINANCIAL IMPACT

SIMRP is designed to help employers reduce payroll-related costs while improving employee take-home pay and benefit value.

The financial impact comes from the way the program is structured within established IRS-recognized tax provisions and formal benefit administration.

For the employer, the program can create payroll-related savings through reduced taxable wage exposure.

For employees, the structure can increase take-home pay while providing access to qualified medical and wellness-related benefits.

The result is a program designed to create value on both sides of the employment relationship.

Employers gain an opportunity to reduce recurring payroll-related expense.

Employees gain an opportunity to receive additional financial and benefit value.

Because SIMRP operates through ongoing payroll and benefit administration, the potential value is not limited to a single filing, single claim, or single refund.

It is designed to continue as long as the organization remains eligible, the plan is properly administered, and the structure remains in place.

WHY SIMRP IS NOT A NEW EXPENSE

One of the first questions financial leaders ask is whether SIMRP creates a new employer cost.

SIMRP is designed around existing payroll and benefit structures.

The objective is not to increase employer compensation expense.

The objective is to improve how certain dollars are structured through an employer-sponsored benefit framework.

Rather than functioning as a new wage increase, bonus program, or added compensation obligation, SIMRP is designed to create efficiency within an existing payroll environment.

That distinction matters.

Traditional approaches to improving employee value often require new spending.

Wage increases increase payroll expense.

Bonuses increase compensation cost.

Expanded benefits often increase employer contribution obligations.

SIMRP is designed differently.

It seeks to create employee value and employer savings through structure, administration, and established tax treatment rather than through additional compensation expense.

CENSUS REVIEW & PRIVACY

A preliminary census review is used to determine whether SIMRP may be appropriate for the organization and to estimate potential financial impact.

This review is designed to limit unnecessary exposure of employee information.

Social Security numbers are not required for the preliminary review.

Banking information is not required.

Employee names are not required.

Employees may be identified by employee number or internal label without exposing unnecessary employee personal or employment information.

This allows financial leadership to evaluate projected impact while maintaining appropriate privacy boundaries during the initial review stage.

The purpose of the census review is not to gather sensitive personal data.

The purpose is to evaluate workforce structure, payroll eligibility, and projected financial opportunity.

Hear how one CFO evaluated the census review process, addressed internal concerns, and discovered that implementation was more organized and less disruptive than expected.

SIMPLE ADMINISTRATION

SIMRP is designed to operate through formal plan administration and third-party support.

The employer maintains appropriate oversight, but day-to-day administration is supported through the administrative structure of the program.

This helps reduce internal disruption and keeps responsibilities clear.

For most organizations, ongoing employer involvement is expected to center around routine workforce updates such as:

new hires,
employee terminations,
payroll changes,
and standard employee status updates.

The program is not designed to place a heavy administrative burden on financial leadership, HR, or payroll teams.

The goal is a structured process that can operate consistently within the employer’s existing payroll and benefit environment.

WHEN SIMRP IS A GOOD FIT

SIMRP may be a good fit for organizations that:

have eligible W-2 employees,
operate regular payroll cycles,
have sufficient taxable wages to support the structure,
want to improve employee take-home pay,
want to enhance employee benefit value,
want to reduce recurring payroll-related costs,
value employee retention and workforce stability,
and are willing to operate the program as a formal employer-sponsored benefit plan.

SIMRP is strongest when the organization views it as a structured long-term benefit strategy rather than a short-term payroll tactic.

WHEN SIMRP IS NOT APPROPRIATE

SIMRP is not appropriate for every organization.

It is generally not appropriate for organizations that operate primarily with 1099 contractors instead of W-2 employees.

It is not appropriate for employers seeking an informal reimbursement arrangement.

It is not appropriate for organizations unwilling to maintain formal plan documentation, third-party administration, substantiation procedures, and ongoing compliance oversight.

It is not appropriate for employers looking for a payroll workaround rather than a structured employee benefit program.

SIMRP should be evaluated carefully and implemented only when the organization is willing to operate within the required administrative and compliance framework.

REQUEST ELIGIBILITY REVIEW

A preliminary review can help determine whether SIMRP is appropriate for the organization and estimate the potential financial impact based on workforce structure and payroll data.

Not every organization will qualify.

The initial review is designed to help financial leadership determine whether further evaluation is warranted before committing additional time or internal resources.