Your team needs you to do what’s best for them, but you also need to keep an eye on your bottom line. When an offer like a self-insured medical reimbursement plan comes up that says it will save you money on taxes and help your workers more, it seems like everyone wins. Yes, it is possible as long as you follow the rules.
There, a lot of business owners stop. It sounds like a great idea to give your employees a medical plan, but then all the legalese and rules have to be followed. The good news is that you don’t have to do this by yourself. You can get the benefits without the work if you get the right help and use a well-run plan like the Lumara Plan.
We will talk about what these plans are, the legal requirements you need to meet, and how Lumara makes it easy to provide useful, tax-free health benefits without having to make any changes or spend any extra money.
First Things First: What Is a Self-Insured Medical Reimbursement Plan?
A self-insured medical reimbursement plan is a type of benefit that lets you, as an employer, pay for some of your workers’ medical bills. Instead of getting a full-coverage plan, you pay directly for eligible medical costs that are covered by a clear plan.
A lot of people use these plans along with or instead of a regular health plan. Their rules come from tax laws like Section 105 and Section 125 of the IRS code. If everything is set up properly, these reimbursements can be tax-free for both the business and the employee.
Last part is important: you have to follow the rules to get the tax breaks. Next, let’s look at those.
What Legal Rules Do Employers Need to Follow?
Self-insured reimbursement plans are totally legal—but they’re not “do-it-yourself.” There are a few key areas where you need to stay compliant.
1. IRS Rules (Sections 105 & 125)
To keep reimbursements tax-free, your plan needs to be formally documented and meet certain IRS requirements:
- You must spell out who qualifies for the plan
- You need to define what expenses are eligible for reimbursement
- You must keep records of the reimbursements
- The plan has to treat employees fairly (no special treatment for owners or execs)
2. ERISA and ACA
Because this is considered a health benefit, it falls under ERISA (the Employee Retirement Income Security Act). That means you need to:
- Create a summary plan description (SPD)
- Assign a plan administrator
- Follow certain fiduciary responsibilities
If you have more than a few employees, parts of the Affordable Care Act (ACA) may also apply, especially if this plan is offered alongside or in place of other coverage.
3. HIPAA and Privacy
When you’re handling anything related to employee health, privacy is critical. If your company is managing medical information directly, you have to follow HIPAA privacy laws. Most employers aren’t set up to do that securely, and shouldn’t be.
That’s another reason why having a fully managed plan like Lumara is so helpful. We take care of the administration and the privacy protections so you don’t have to.
Why Do Employers Hesitate?
It’s simple: the rules can seem overwhelming. Employers worry about staying compliant, handling sensitive information, or having to change their current health plan. And that’s fair—those concerns are real.
But here’s what many don’t realize: with the right partner, you don’t need to stress over the details. Lumara takes care of all the heavy lifting. You don’t need to become a tax code expert or a compliance officer. You just need to want better benefits for your team and better margins for your business.
How the Lumara Plan Keeps You Compliant (and Worry-Free)
At Lumara, we’ve built our plan to meet all the key requirements from the ground up. That includes:
- A Section 125 Cafeteria Plan that allows for pre-tax deductions
- A Preventive Care Management Program that helps employees stay healthy and engaged
- A Self-Insured Medical Reimbursement Plan that provides tax-free reimbursements for qualifying expenses
Because everything is structured, documented, and run by licensed professionals, you get the peace of mind of knowing you’re compliant with IRS, ERISA, ACA, and HIPAA rules. Plus, the entire plan is designed to work alongside your current health coverage, so there’s no need to change what you already have in place.
Real Benefits Without the Legal Headaches
Let’s break down what you and your employees actually get from a compliant plan like Lumara’s.
For Employers:
- Save $500 to $600 per employee, per year in payroll taxes
- Keep your current plan in place—no changes needed
- No out-of-pocket cost to implement the plan
- Reduce claims by promoting preventive care
- Lower turnover and increased retention
- Stay 100% compliant with all legal requirements
For Employees:
- Tax-free benefits that boost their take-home pay
- Access to mental health services, telemedicine, and wellness tools
- Coverage that extends to spouses and dependents
- No extra costs, no disruption to their current benefits
- On average, a 3–4% increase in net paycheck
It’s rare to find a benefit that actually gives something to everyone involved—Lumara is one of those rare solutions.
A Smarter Way to Support Your Team
At the end of the day, offering a medical program for employees shouldn’t be a legal nightmare—and it doesn’t have to be.
The Lumara Plan was designed to give you all the advantages of a self-insured medical reimbursement plan, without the risks, complexity, or upfront costs. We handle the legal side. We handle the admin. You focus on growing your business and supporting your team.
It’s not just a smart tax move—it’s a smart business move.
Want to See What Lumara Could Save You?
If you’re curious how much your business could save—or how your team could benefit—let us show you. We’ll put together a simple, personalized proposal based on your company’s size and goals. No pressure, no commitment.
Click here to get your free Lumara Plan proposal.
Support your team. Stop wasting taxes. Stay compliant.
With Lumara, you can do all three—without spending more or changing your current setup.
