WIMPER is an acronym for Wellness Integrated Medical Plan Expense Reimbursement.
The term was coined by Dr. Peter Karl and Dominick G. Mondi in their January 2021 article “20 Questions About Establishing a Health & Wellness Program in the Workplace,” published in The CPA Journal. Their work publicized the application of Section 125 cafeteria plans combined with Self-Insured Medical Reimbursement Plans (SIMRPs) to create a tax-advantaged wellness benefit structure.
As Karl and Mondi explained in their article, “This unified health care approach provides a tax-advantage, affordable means to purchase secondary health insurance products. A medical insurance plan along with a well-designed wellness program encourages employees to take personal responsibility to help minimize healthcare costs.”
[Source: Karl, P. & Mondi, D.G. (2021). “20 Questions About Establishing a Health & Wellness Program in the Workplace.” The CPA Journal. https://www.cpajournal.com/2021/01/27/20-questions-about-the-establishing-a-health-wellness-program-in-the-workplace/]
WIMPER operates at the intersection of three critical sections of the Internal Revenue Code:
Section 125 allows employers to establish cafeteria plans—also known as flexible benefit plans—that permit employees to choose between taxable cash compensation and qualified nontaxable benefits. When an employee elects to reduce their salary to pay for qualified benefits, these contributions are not considered wages for federal income tax purposes.
The IRS defines a cafeteria plan as “a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of Section 125 of the Internal Revenue Code.”
Section 105(b) establishes that amounts paid to reimburse employees for medical care expenses are excluded from gross income. Specifically, the code states that gross income does not include “amounts paid, directly or indirectly, to the taxpayer to reimburse the taxpayer for expenses incurred for the medical care (as defined in section 213(d)) of the taxpayer, his spouse, his dependents (as defined in section 152), and any child (as defined in section 152) of the taxpayer who as of the end of the taxable year has not attained age 27.”
[Source: Internal Revenue Code Section 105(b)]
This provision is the legal foundation for Self-Insured Medical Reimbursement Plans (SIMRPs), which allow employers to reimburse employees for qualified medical expenses on a tax-free basis.
Section 213(d) defines “medical care” as amounts paid for:
[Source: Internal Revenue Code Section 213(d)]
The IRS has published extensive guidance on what constitutes qualified medical expenses, including preventative care services, wellness programs, telehealth services, mental health support, and chronic disease management programs.
The WIMPER framework integrates all three code sections to create a compliant, tax-advantaged employee benefit structure.
A properly designed WIMPER program consists of three integrated components:
Employees make pre-tax contributions through payroll deduction via a salary reduction agreement. These contributions are deducted from gross wages before calculating:
This immediate reduction in taxable wages creates savings for both the employee and employer.
The employer establishes a wellness program that provides medical care as defined under IRC Section 213(d). According to IRS Memorandum 201703013, “The value of coverage by an employer-provided wellness program that provides medical care (as defined under § 213(d)) is generally excluded from an employee’s gross income under § 106(a).”
[Source: IRS Office of Chief Counsel Memorandum 201703013, January 20, 2017]
The wellness plan must meet the standards established by the Affordable Care Act (ACA) for participatory wellness programs. These programs, as defined in 42 U.S. Code § 300gg-4(j)(3)(C), require participants to complete at least one wellness activity per year but do not condition rewards on achieving specific health outcomes.
The SIMRP provides tax-free reimbursements for qualified medical expenses under Section 105(b). These reimbursements are not considered wages and are not subject to:
According to IRS Publication 15 (Circular E), “Medical care reimbursements paid for an employee under an employer’s self-insured medical reimbursement plan aren’t wages and aren’t subject to social security, Medicare, and FUTA taxes, or income tax withholding.”
[Source: IRS Publication 15 (Circular E), Employer’s Tax Guide, 2024]
The primary financial benefit for employers comes from reduced Federal Insurance Contributions Act (FICA) taxes. FICA consists of:
[Source: Social Security Administration, 2024]
When employee wages are reduced through the Section 125 salary reduction agreement, the employer’s FICA obligation decreases proportionally.
Example Calculation:
For an employee contributing $1,220 monthly ($14,640 annually) to the WIMPER program:
For a company with 100 eligible employees, this translates to $112,000 in annual FICA tax savings.
Employees benefit in two significant ways:
1. Increased Take-Home Pay
By reducing taxable wages, employees pay less in:
Using the same $1,220 monthly contribution example, an employee in the 22% federal tax bracket saves approximately:
2. Enhanced Benefits at No Net Cost
The tax savings fund access to qualified medical benefits that might otherwise be unaffordable, including:
According to the Centers for Medicare & Medicaid Services (CMS), the average American spent $12,914 on healthcare in 2021, with a significant portion going to out-of-pocket expenses not covered by traditional health insurance.
[Source: Centers for Medicare & Medicaid Services, National Health Expenditure Data, 2021]
WIMPER programs allow employees to access an average of $1,800 in additional annual benefits funded through tax savings, effectively increasing their total compensation package without reducing net take-home pay.
To establish a WIMPER program, employers must meet specific criteria:
1. Minimum Employee Count
2. Existing Health Coverage
3. Business Structure
4. Compliance Capability
Not all employees within a qualifying organization may be eligible to participate:
Eligible Employees:
Excluded Employees:
These exclusions are mandated by IRS regulations governing Section 125 cafeteria plans and Section 105 medical reimbursement plans.
WIMPER programs must comply with the Affordable Care Act’s wellness program regulations. The Department of Health and Human Services (HHS), Department of Labor (DOL), and Department of the Treasury jointly regulate wellness programs to ensure they are non-discriminatory and accessible.
WIMPER utilizes a participatory wellness program model, which the ACA defines as a program that:
According to 42 U.S. Code § 300gg-4(j)(3)(C), participatory programs may include:
[Source: 42 U.S. Code § 300gg-4 - Prohibiting discrimination against individual participants and beneficiaries based on health status]
Critical Compliance Point: Unlike outcome-based wellness programs (which require achieving specific health metrics like BMI or cholesterol levels), participatory programs are not subject to the ACA’s 30% incentive cap. This allows WIMPER programs to provide more substantial benefits to participants.
One of the most important compliance considerations is understanding how WIMPER differs from wellness programs that incorporate fixed indemnity insurance plans.
A fixed indemnity insurance plan pays a predetermined dollar amount for specific medical services or diagnoses, regardless of actual costs incurred. For example, a fixed indemnity plan might pay $100 per day for hospital stays or $50 per doctor visit.
According to IRS Chief Counsel Memorandum 201703013, “Payments received by employees under an employer-provided fixed indemnity health plan are gross income under IRC section 106(a) if the value of the coverage was excluded from an employee’s gross income and wages.”
[Source: IRS Office of Chief Counsel Memorandum 201703013, December 12, 2016]
The IRS considers this “double-dipping”—taking a tax deduction for the premium paid on a pre-tax basis, then also receiving tax-free payments from the plan. If premiums are paid pre-tax through a Section 125 plan, any fixed indemnity payments become taxable income.
WIMPER programs use IRC Section 213(d) qualified medical expenses rather than fixed indemnity payments. The benefits provided through WIMPER are actual medical care services (telehealth, prescriptions, wellness coaching, etc.), not cash payments based on medical events.
As the IRS Chief Counsel stated in Memorandum 201622031, “Cash rewards paid to employees for participating in a wellness program are not excludable from an employee’s gross income under IRC sections 105 or 106; therefore, they are taxable unless the reimbursements of premiums are used for medical care under IRC section 213(d).”
[Source: IRS Office of Chief Counsel Memorandum 201622031, April 14, 2016]
WIMPER compliance key: The program reimburses employees for medical care expenses (diagnosis, treatment, prevention of disease) as defined in Section 213(d), not for cash incentives or fixed indemnity payments.
WIMPER programs benefit from multiple layers of legal and regulatory support:
This foundational ruling established that employer reimbursements for employee health insurance premiums are excluded from the employee’s gross income under Section 106. The ruling states: “If an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Code § 106.”
[Source: IRS Revenue Ruling 61-146, 1961-2 C.B. 25]
These publications established the formal framework for Health Reimbursement Arrangements (HRAs), which include SIMRPs. They confirmed that employer-funded reimbursement arrangements meeting specific criteria qualify for tax exclusion under Section 105.
[Source: IRS Notice 2002-45, 2002-2 C.B. 93; IRS Revenue Ruling 2002-41, 2002-2 C.B. 75]
The 2021 CPA Journal article by Dr. Karl and Mondi provided the comprehensive framework for integrating wellness programs with Section 105 medical reimbursement plans and Section 125 cafeteria plans. Their work demonstrated how these three components could be combined in a compliant manner to create the WIMPER structure.
Organizations implementing WIMPER programs typically obtain legal opinions from qualified tax attorneys and CPAs who specialize in employee benefits and tax law. These opinions provide an additional layer of protection by confirming that the specific plan design meets all IRS requirements.
No. WIMPER is a supplemental benefit strategy that works alongside, not instead of, traditional health insurance. Employers must maintain an ACA-compliant major medical plan or Minimum Essential Coverage (MEC) for their employees. WIMPER provides additional wellness benefits and tax advantages.
When properly structured, WIMPER should not reduce employee take-home pay. The pre-tax contributions create tax savings that fund the wellness benefits. Employees effectively trade taxable wages for nontaxable benefits, maintaining or even increasing their net compensation.
WIMPER programs are structured as participatory wellness plans under the ACA. Participants must complete at least one qualifying wellness activity per year (such as a health risk assessment, wellness appointment, or educational program).
If an employee fails to participate, they may become ineligible for continued benefits, and any reimbursements received while non-compliant may be treated as taxable income.
Generally, no. IRS regulations exclude certain individuals from participating in Section 125 cafeteria plans:
However, business owners can still benefit from the employer FICA tax savings generated by employee participation.
WIMPER programs must be carefully structured to avoid disqualifying employees from HSA contributions. According to IRS Publication 969, individuals covered by a health reimbursement arrangement (HRA) that pays or reimburses qualified medical expenses are not eligible to contribute to an HSA.
[Source: IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans]
However, WIMPER programs can be designed as “limited purpose” or “suspended” HRAs that only reimburse certain expenses (like dental and vision) or that suspend reimbursements for HSA-eligible individuals until they cease HSA contributions.
A compliant WIMPER program requires:
All documentation should be reviewed by qualified legal counsel to ensure compliance with IRS, ERISA, HIPAA, and ACA requirements.
Establishing a WIMPER program typically follows this timeline:
Weeks 1-2: Analysis and Design
Weeks 3-4: Documentation and Approval
Weeks 5-6: Communication and Enrollment
Weeks 7-8: Implementation
Ongoing: Administration
Most organizations can fully implement a WIMPER program within 60-90 days of initial decision.
WIMPER must be understood in the context of rising healthcare costs and the changing employer benefits landscape.
According to the Centers for Medicare & Medicaid Services:
[Source: Centers for Medicare & Medicaid Services, National Health Expenditure Data, 2021. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical]
The Kaiser Family Foundation’s annual Employer Health Benefits Survey provides critical data on employer-sponsored health insurance:
[Source: Kaiser Family Foundation, 2023 Employer Health Benefits Survey. https://www.kff.org/health-costs/report/2023-employer-health-benefits-survey/]
For a company with 100 employees (assuming 60% single coverage and 40% family coverage):
Annual health insurance costs:
The Centers for Disease Control and Prevention (CDC) reports that 90% of the nation’s $4.1 trillion in annual healthcare expenditures are for people with chronic and mental health conditions.
[Source: Centers for Disease Control and Prevention, Health and Economic Costs of Chronic Diseases. https://www.cdc.gov/chronicdisease/about/costs/index.htm]
Many of these chronic conditions—including type 2 diabetes, heart disease, and obesity—are preventable or manageable through lifestyle interventions, regular screenings, and proactive health management.
WIMPER programs emphasize preventative care by making wellness services more accessible and affordable. By providing no-cost access to:
WIMPER creates incentives for employees to address health concerns before they become expensive chronic conditions.
Maintaining WIMPER program compliance requires ongoing attention to several regulatory frameworks:
The Employee Retirement Income Security Act (ERISA) governs most employer-sponsored benefit plans. WIMPER programs structured as SIMRPs are generally subject to ERISA, requiring:
[Source: Department of Labor, Employee Benefits Security Administration, ERISA]
The Health Insurance Portability and Accountability Act (HIPAA) establishes privacy and security standards for protected health information (PHI). WIMPER programs must:
[Source: U.S. Department of Health and Human Services, HIPAA for Professionals]
The Affordable Care Act’s market reform provisions apply to most group health plans, including certain aspects of WIMPER programs:
However, because WIMPER programs are structured around reimbursement for expenses rather than as insured products, many traditional insurance regulations do not apply.
Section 105 plans must satisfy non-discrimination requirements:
Eligibility Test: The plan must benefit either:
Benefits Test: Plan benefits must not discriminate in favor of highly compensated individuals (HCIs). All participants in the same class must have access to the same benefits.
Classification Test: Any eligibility classifications must be reasonable and not designed to favor HCIs.
If a plan fails non-discrimination testing, HCIs may have to include reimbursements in taxable income.
[Source: Internal Revenue Code Section 105(h); Code of Federal Regulations § 1.105-11]
Modern WIMPER programs leverage technology platforms to streamline administration and enhance participant experience:
These technological capabilities reduce administrative burden while improving the participant experience and ensuring ongoing compliance.
Several trends suggest continued growth and evolution of WIMPER-style programs:
The healthcare industry is moving toward consumer-directed models that give individuals more control over healthcare decisions and spending. WIMPER aligns with this trend by providing employees with resources to make informed health choices.
Modern compensation strategies emphasize total rewards—the combination of salary, benefits, development opportunities, and work environment. WIMPER enhances total rewards by increasing the value of the benefits package without requiring additional out-of-pocket employer costs.
Post-pandemic, employers recognize the importance of mental health and holistic wellness support. WIMPER programs can include comprehensive mental health services, stress management resources, and work-life balance support.
Telehealth, digital therapeutics, and AI-powered health coaching are making preventative care more accessible and effective. WIMPER programs that integrate these technologies deliver better health outcomes at lower costs.
The tax code provisions underlying WIMPER (Sections 105, 125, and 213(d)) have been stable for decades. Recent IRS guidance has clarified compliance requirements, providing a clear framework for program design.
Organizations interested in exploring WIMPER should:
WIMPER—Wellness Integrated Medical Plan Expense Reimbursement—represents a sophisticated approach to employer-sponsored benefits that leverages established tax code provisions to create value for both employers and employees.
By integrating a Section 125 cafeteria plan, a Section 106 wellness program providing IRC Section 213(d) medical care, and a Section 105 self-insured medical reimbursement plan, WIMPER creates a compliant framework that:
First introduced to the professional community through the 2021 CPA Journal article by Dr. Peter Karl and Dominick G. Mondi, WIMPER has emerged as a valuable tool for mid-sized employers seeking to control benefits costs while improving employee satisfaction and retention.
For organizations with 10 or more full-time employees that already offer health insurance, WIMPER deserves serious consideration as part of a comprehensive benefits strategy.
IRS Resources:
Regulatory Guidance:
Original Research:
Industry Data:
About the Author
Matthew Ragudo, CRPC®, CLTC®, is Director of Finance and Operations at The WIMPER Institute, where he specializes in tax-advantaged benefit strategies and financial planning for employers. With over 10 years of experience in employee benefits and tax law, Matthew helps organizations design compliant, cost-effective benefits programs that enhance recruitment, retention, and employee satisfaction.
Disclaimer: This article provides general educational information about WIMPER programs and should not be construed as legal, tax, or financial advice. Every employer’s situation is unique, and specific implementation requires consultation with qualified attorneys, CPAs, and benefits professionals. Tax laws and regulations are subject to change. Please consult with your professional advisors before implementing any benefits strategy.
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