Compliance Framework

IRS Code Foundation

The WIMPER program is built on three sections of the Internal Revenue Code. Each has specific requirements that must be met for benefits to be excludable from gross income.

IRC Section 125: Cafeteria Plans

Section 125 allows employees to choose between taxable cash compensation and qualified benefits. When structured as a cafeteria plan, employee contributions are made on a pre-tax basis, reducing both the employee’s taxable income and the employer’s FICA obligation.

Key requirements:

• Written plan document
• Annual election period
• Irrevocable elections (with qualifying event exceptions)
• Nondiscrimination testing

IRC Section 105(b): Self-Insured Medical Reimbursement

Section 105(b) allows employers to reimburse employees for medical expenses through a self-insured plan. When properly structured as a SIMRP, these reimbursements are excluded from the employee’s gross income.

Key requirements:

• Employer-funded (not employee salary reduction)
• Written plan document
• Covers Section 213(d) medical expenses only
• Nondiscrimination requirements

IRC Section 213(d): Qualifying Medical Expenses

Only expenses defined as “medical care” under Section 213(d) qualify for reimbursement. This includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease.

WIMPER does not reimburse:

• Fixed indemnity payments
• Non-qualifying expenses
• Taxable cash equivalents

Compliance Architecture

The WIMPER program integrates Section 125 salary reduction with Section 105(b) employer reimbursement in a way that maintains compliance with all applicable IRS requirements, including nondiscrimination testing and documentation standards.

All plan documents, testing results, and compliance records are maintained in a Digital Compliance Vault accessible to the employer at all times.