Self-Insured Medical Expense Program (SIMERP)
A SIMERP is a self-insured health benefit plan where the employer funds claims directly instead of buying traditional group insurance. Administered under ERISA with access to major PPO networks like Cigna and First Health. FreedInsure designs, implements, and manages SIMERP plans for employers of all sizes.
Get a Free SIMERP Quote ↓What Is a Self-Insured Medical Expense Reimbursement Program?
A Self-Insured Medical Expense Reimbursement Program (SIMERP) is an employer-sponsored health benefit plan where the employer assumes the financial risk for paying employee healthcare claims directly, rather than purchasing a fully-insured group health insurance policy from a carrier.
How a SIMERP Works
Instead of paying monthly premiums to an insurance company, the employer sets aside funds to pay claims as they occur. A Third-Party Administrator (TPA) processes claims, manages the provider network, handles member services, and provides the infrastructure that makes the plan function identically to traditional insurance from the employee’s perspective. Employees receive ID cards, access provider directories, and submit claims exactly as they would with a fully-insured plan.
Provider Networks
SIMERP plans access major carrier networks — most commonly Cigna PPO or First Health Network. This means employees see the same doctors, hospitals, and specialists available on traditional insurance plans. Network-negotiated rates apply, reducing the actual cost of claims significantly compared to uninsured pricing.
ERISA Governance
SIMERPs are governed by the Employee Retirement Income Security Act (ERISA) at the federal level. ERISA preempts most state insurance mandates, giving employers greater flexibility in plan design. This means SIMERP plans are not subject to state-specific coverage requirements that apply to fully-insured group plans, allowing employers to customize benefit levels, exclusions, and cost-sharing structures. See PPO plan options →
Why Employers Choose SIMERP Over Traditional Group Insurance
Self-insured plans are used by over 60% of covered workers in the United States. Here’s why employers choose SIMERP over traditional fully-insured group health insurance:
Lower Costs
Self-funding eliminates the carrier’s profit margin, risk charge, and state premium taxes (typically 2–4% of premiums). Employers with healthy workforces save 10–30% compared to equivalent fully-insured plans.
Claims Transparency
With a fully-insured plan, the carrier keeps all claims data. With SIMERP, the employer receives detailed claims reporting — who is using what services, what the biggest cost drivers are, and where wellness programs could reduce spending.
Plan Design Flexibility
ERISA preemption means employers can customize benefits beyond state mandates. Add telemedicine, adjust copay structures, include fertility benefits, or design wellness incentives — without the constraints of state-regulated group plans.
Cash Flow Control
Instead of fixed monthly premiums, employers pay claims as they occur. In low-claims months, the employer keeps the savings. This is particularly advantageous for employers with younger, healthier workforces.
Stop-Loss Insurance: Protecting Against Catastrophic Claims
The biggest concern employers have about self-funding is catastrophic claim exposure — what happens if one employee has a $500,000 hospital stay? Stop-loss insurance solves this.
Specific Stop-Loss
Specific stop-loss (also called individual stop-loss) protects the employer from any single claim exceeding a set threshold — typically $25,000–$100,000. If one employee’s claims exceed the threshold, the stop-loss carrier reimburses the excess. This caps the employer’s per-person risk at a predictable amount.
Aggregate Stop-Loss
Aggregate stop-loss protects against total plan claims exceeding a set annual amount — typically 125% of expected claims. If the entire plan’s claims exceed the aggregate attachment point, the stop-loss carrier covers the overage. This protects against unusually high-claims years across the entire workforce.
The Safety Net
With both specific and aggregate stop-loss in place, the employer’s maximum financial exposure is capped and predictable. The employer benefits from savings in normal years while being protected from catastrophic scenarios. This is why SIMERPs are viable for employers of all sizes — even companies with 5–50 employees.
What Size Employer Is SIMERP Right For?
SIMERPs work for employers of all sizes, but the value proposition varies by company size and workforce demographics.
Small Employers (5–50 Employees)
Small employers benefit from SIMERP when they have a relatively young, healthy workforce and want to avoid the high premiums of fully-insured small group plans. Stop-loss insurance makes the risk manageable. Monthly costs are often 15–25% less than equivalent fully-insured plans.
Mid-Size Employers (50–250 Employees)
The sweet spot for SIMERP. Large enough to have predictable claims patterns, small enough that the administrative savings are meaningful. Claims data helps HR make informed decisions about plan design and wellness programs.
Large Employers (250+ Employees)
Most large employers already self-fund. SIMERP provides an alternative TPA and network option that may offer better service, lower admin fees, or access to different provider networks than their current arrangement.
Industries That Benefit Most
SIMERPs are particularly popular in construction, staffing, hospitality, restaurants, and retail — industries with large numbers of hourly, part-time, or seasonal workers who may not qualify for traditional group insurance. SIMERP can be combined with MEC plans for part-time workers who need compliance coverage.
SIMERP vs. Fully-Insured vs. ACA Marketplace
Understanding how SIMERP compares to other coverage options helps employers make the right choice for their workforce.
SIMERP vs. Fully-Insured Group
Fully-insured: carrier assumes all risk, employer pays fixed premiums, carrier keeps claims savings. SIMERP: employer assumes risk (with stop-loss protection), employer keeps claims savings, full transparency on claims data. SIMERP typically costs 10–30% less for healthy workforces.
SIMERP vs. ACA Marketplace (ICHRA)
Some employers use Individual Coverage HRAs (ICHRAs) to reimburse employees for ACA Marketplace premiums instead of offering group coverage. SIMERP offers more control over plan design and typically provides richer benefits, while ICHRA gives employees individual plan choice. FreedInsure helps employers evaluate both options. ACA plans →
SIMERP vs. Level-Funded
Level-funded plans are a hybrid — the employer pays a fixed monthly amount that includes claims funding, stop-loss, and admin fees. If claims are lower than expected, the employer receives a refund. Level-funded is often the entry point for employers new to self-funding before transitioning to a full SIMERP.
SIMERP vs. Traditional Insurance at a Glance
| Feature | SIMERP (Self-Insured) | Fully-Insured Group |
|---|---|---|
| Who pays claims | Employer (via TPA) | Insurance carrier |
| Risk | Employer (with stop-loss) | Carrier |
| Regulation | ERISA (federal) | State insurance dept. |
| Plan design | Fully customizable | Carrier-defined options |
| Claims data | Full transparency | Carrier keeps data |
| State premium tax | Exempt | 2–4% of premiums |
| Savings potential | 10–30% in healthy years | Fixed cost regardless |
| Network | Cigna PPO, First Health | Carrier-specific |
| Best for | Cost-conscious employers | Risk-averse employers |
Who Should Read This
🏛️ Employer Self-Funding
Fund claims directly instead of paying carrier premiums. Keep savings in healthy years. Full claims transparency and control.
📋 Cigna & First Health Networks
Employees access the same doctors and hospitals as traditional insurance through major PPO networks.
🛡️ Stop-Loss Protection
Specific and aggregate stop-loss caps your maximum exposure. Catastrophic claims are covered by the reinsurer.
📊 Claims Transparency
See exactly where healthcare dollars go. Use data to design wellness programs and control costs year over year.
Frequently Asked Questions
Get Your Free SIMERP Quote
Self-funded health benefits with major PPO networks. Stop-loss protection. Full claims transparency. Free employer consultation.
What Our Members Say
SIMERP — Self-Funded Health Benefits
FreedInsure designs and manages self-insured health benefit plans for employers of all sizes. Cigna PPO and First Health networks. Free consultation.
Get a Free SIMERP Quote →