What Is the SIMRP Plan — And Why Should Your School District Care?

If you've never heard of a Self-Insured Medical Reimbursement Plan — or SIMRP — you're not alone. It's one of the best-kept secrets in employee benefits, and it's especially powerful for school districts and their employees. At XO Financial, it's become one of the most impactful tools we bring to the educators and districts we serve.

So let's break it down in plain English.​

​What exactly is a SIMRP?

​A SIMRP is a federally compliant employee benefit program that uses existing tax law to put more money in your employees' pockets — without costing the district anything extra. It combines two IRS-approved components: a Section 125 Voluntary Wellness Program and a Section 105(b) Self-Insured Medical Reimbursement Plan.

In simple terms, here's how it works: a portion of an employee's paycheck is set aside on a pre-tax basis to participate in a wellness program. That pre-tax deduction lowers their taxable income, which means they pay less in federal taxes. After taxes are calculated, the employee is reimbursed for their participation in the wellness plan. The result? Their take-home pay actually goes up — not down.

Does it really cost employees nothing?

​That's the part that surprises most people. Yes — when the plan is structured correctly, employees receive wellness benefits and see an increase in their net take-home pay. The tax savings essentially fund the program. A portion of those savings covers the plan's admin fee, and the rest goes back to the employee as a pay increase.

Based on real-world results we've seen with Texas school districts, employees can see an average increase of over $200 per month in take-home pay. For a teacher or coach living on a fixed salary, that's a meaningful difference.

What does the district get out of it?

​Plenty. Because employees' taxable income is reduced, the district also pays less in payroll taxes — which adds up to significant savings for large districts. We've seen districts with thousands of employees save hundreds of thousands of dollars annually in employer payroll tax reductions. Those savings can be redirected toward other district priorities.

Beyond the finances, the program delivers real wellness benefits to employees — things like preventative care, critical illness coverage, and access to health management resources. Healthier employees mean fewer absences, better morale, and stronger retention.

And here's something most people don't expect: the Attentive Wellness Plan also generates scholarship funds for graduating seniors. For every employee participating in the plan, $4 per month is donated to a dedicated scholarship fund in the district's name. In a district with 5,500 participants, that adds up to $264,000 in annual scholarships for students — awarded year after year. The fund can even be named in honor of a beloved educator, staff member, or local leader, making it a lasting tribute to someone who made a difference in your community.

For a district administrator, that's a powerful story to tell — a benefits program that saves the district money, improves employee wellness, increases take-home pay, and funds college scholarships for students all at the same time.

Is it legal? Is it IRS compliant?

Absolutely. The SIMRP is grounded in well-established IRS tax codes — specifically Sections 105, 106, and 125 — and must be structured and administered in compliance with IRS, ERISA, HIPAA, and ADA standards. When implemented correctly through a qualified provider, it is a fully compliant benefit plan. At XO Financial, we work with the Attentive Wellness Plan, which is a proven, compliant SIMRP solution with a track record across both public and private sector organizations nationwide.

Who is it for?

The SIMRP works for both school districts and private businesses. Any organization with W-2 employees averaging at least 30 hours per week can potentially benefit. Whether you're a small school district in rural Texas or a growing business across the country, the fundamentals are the same.

What's the catch?

Honestly — there isn't one, as long as the plan is implemented correctly. The key is working with an experienced advisor who understands the compliance requirements and can structure the plan properly for your organization. That's where we come in.

Ready to see what your district could save?

At XO Financial, we've been serving Texas educators and school districts since 2001 and now work with organizations across the country. We'd love to show you a customized projection of what the SIMRP could mean for your district and your employees.

Contact us today to schedule a free consultation.
(888) 528-4511 | xofinancial.com​