WIMPER
Wellness & Integrated Medical Plan Expense Reimbursement
Implementing a Wellness and Integrated Medical Plan Expense Reimbursement (WIMPER) program through a Section 125 Cafeteria Plan can deliver substantial benefits for businesses looking to control costs while enhancing employee well-being. This strategic approach combines wellness resources with structured medical expense reimbursements, creating a tax-efficient benefits package that serves both employer and employee interests.
The Financial Impact
- Employers typically save hundreds of dollars per employee annually through reduced FICA taxes
- Payroll tax savings quickly add up across the workforce
- Expand benefits offerings without exceeding budget constraints
- Create a competitive edge in attracting and retaining top talent
- Measurable improvements in productivity and reductions in absenteeism
Employee Benefits
- Comprehensive wellness support without impacting take-home pay
- Access to preventive care, telehealth services, and health coaching
- Tax-free reimbursements for eligible medical expenses
- Benefits package that employees genuinely value and use
Core Components
- Section 125 Cafeteria Plan – Pre-tax elections for qualified benefits
- Wellness Program – Preventive care, coaching, and digital health resources
- Section 105 Medical Reimbursement – Tax-free reimbursements of eligible expenses
- Compliance Infrastructure – Written plan documentation, nondiscrimination testing, and clear election rules
HOW CAN A BUSINESS IMPLEMENT THIS PROGRAM?
Getting Started
- Assemble a cross-functional team (HR, Payroll, Legal) with an executive sponsor
- Assess workforce needs and design a plan balancing wellness and medical reimbursement
- Create a written Section 125 plan document and summary plan description
- Conduct thorough review with CPAs and ERISA attorneys
- Timeline: Most employers can implement within 4–6 weeks with proper planning
Technical Setup
- Configure payroll system to handle pre-tax deductions correctly
- Select wellness vendor and third-party administrator (TPA)
- Establish clear data-sharing protocols and service level agreements
- Test all systems before launch
Launch and Communication
- Create clear, employee-friendly materials that explain benefits and participation
- Avoid jargon—focus on concrete examples of employee benefits
- Provide strong incentives and straightforward enrollment processes
- Drive participation rates that deliver meaningful ROI
Ongoing Management
- Conduct annual nondiscrimination testing to maintain IRS compliance
- Monitor participation rates and wellness engagement regularly
- Document all reimbursements with proper substantiation
- Track metrics and make data-driven adjustments
How It Works
For Employees
- Access to comprehensive wellness ecosystem with preventive care
- Health coaching by certified practitioners
- Digital health resources for informed health decisions
- Tax-free reimbursements for eligible medical expenses
- Pre-tax payroll deductions reduce taxable income
- No impact on take-home pay while gaining valuable benefits
For Employers
- Lower FICA tax liability creates immediate financial benefits
- Investment in prevention reduces avoidable claims and absences
- Measurable reductions in healthcare costs over time
- Enhanced employee satisfaction and retention
- Competitive advantage in talent acquisition
Risk Controls
- Maintain strict eligibility and election-change rules
- Reimburse only qualified medical expenses with proper documentation
- Avoid designs that resemble cash compensation or fixed-indemnity payments
- Preserve tax advantages while meeting regulatory requirements
Success Metrics to Track
- Participation rates
- Wellness engagement scores
- FICA savings calculations
- Total cost of benefits per employee
- Employee satisfaction and retention data
- Reductions in avoidable claims and absences
Real-World Results
Manufacturing Company: $120,000 Annual Savings
- Challenge: Rising healthcare costs and low wellness engagement
- Solution: Section 125 WIMPER plan with wellness incentives and medical reimbursements
- Results:
- $120,000 in annual payroll tax savings
- 30% increase in wellness participation
- Cultural shift toward proactive health management
Tech Startup: 15% Retention Improvement
- Challenge: High turnover in competitive market
- Solution: Wellness reimbursements under Section 125 Cafeteria Plan (telehealth, fitness benefits)
- Results:
- 15% improvement in employee retention within one year
- Significant rise in satisfaction scores
- Program became a recruiting differentiator
Frequently Asked Questions
How do we ensure compliance with IRS rules?
Maintain a written plan document, conduct annual nondiscrimination testing, and follow election-change rules. Regular audits and proper documentation provide the foundation for compliance.
What tax savings can employers expect?
Typically, employers save on FICA taxes—often hundreds of dollars per employee annually. The exact savings depend on participation rates and the structure of pre-tax elections.
Who is eligible to participate?
Generally, W-2 employees are eligible; owners and >2% S-corp shareholders cannot participate due to IRS restrictions on highly compensated individuals.
What are the main risk mitigation steps?
Avoid cash-like reimbursements, document all expenses with proper substantiation, and ensure elections align with qualifying events. Clear policies and consistent administration prevent compliance issues.