A Strategic Financial Framework for Employers
Employers today are under pressure to retain talent, contain benefit costs, and improve profitability—
all while navigating economic volatility. By combining a Preventive Care Program with a Private Enterprise Risk Insurance Structure, companies can unlock a powerful, tax-advantaged strategy to:
– Increase employee take-home pay
– Increase net cash flow and retained earnings
– Lower risk exposure and improve financial resilience
A pre-tax health benefits strategy that increases employee pay while reducing employer costs.
Used for employers with 50 or more employees.
Business, Agency, Unions, Government.
| Benefit | Impact |
| Reduces Taxable Payroll | Lowers FICA, FUTA, SUTA, and workers’ compensation liabilities |
| Increase Take-Home Pay | Employees keep more of what they earn without a raise |
| No Net Employer Cost | Funded through payroll tax savings—self-liquidating structure |
| Improves Health Outcomes | Preventive care lowers claims, reducing future premium increases |
| Enhances Net Cash Flow | Payroll tax savings directly increase net operating income |
Result: Higher employee satisfaction and retention, with measurable improvement to EBITDA.
Transforms unrecoverable insurance expenses into retained capital and future profit.
Companies spending over 60k in premiums would benefit.
| Benefit | Impact |
| Retains Premium Dollars | Up to 60% of premiums are captured in a Segregated Asset Plan (SAP) |
| Generates Underwriting Profit | Enterprise shares in surplus when claims are low |
| Covers Non-Traditional Risks | Protects against cyber, regulatory, supply chain events |
| Tax Advantaged | Jurisdictional structures offer favorable tax treatment |
| Capitalizes Risk Management | Converts risk mitigation into balance sheet strength |
Result: Lower volatility, enhanced equity, and access to long-term strategic capital.
| Financial Area | Preventive Care Program | Private Insurance Structure |
| Cash Flow | ↑ Payroll tax savings | ↑ Retained premiums, ↓ risk outflows |
| Operating Expenses | ↓ Payroll liabilities, ↓ healthcare premiums | ↓ Insurance costs, ↓ exposure to uninsured losses |
| Balance Sheet Assets | No direct change | ↑ SAP asset value |
| Equity & Retained Earnings | Indirect via reduced costs | Direct via surplus participation and tax efficiency |
| Liquidity Ratio | ↑ Through payroll tax recovery | ↑ Through reduced claims and retained capital |
These dual programs are cost-neutral or cost-positive, providing a modern benefits framework that:
– Improves employee financial wellness
– Reduces enterprise risk
– Boosts bottom-line profitability
📈 A smart move for CFOs, HR, and strategic finance leaders seeking resilience without compromise.
For Private Equity Sponsors & Family Office Investors
Use Case: Tax-Efficient Workforce Compensation Strategy to Drive EBITDA Growth
As part of our value creation playbook, we deployed the Preventive Care Program (SIMERP) across a 1,200-employee services business in Year 1 of acquisition. This IRS-compliant program functions as a pre-tax medical reimbursement structure, increasing employee net pay without salary inflation—while simultaneously reducing employer payroll tax liabilities.
| Metric | Result |
|---|---|
| Employer FICA Savings | ↑ $93.33 per employee/month → ~$1.34M/year on 1,200 FTEs |
| Employee Take-Home Pay Increase | ↑ $1,220/month via non-taxable reimbursements (IRC §105/106/125) |
| Cost of Program to Employer | $0 (fully funded via payroll tax recovery) |
| EBITDA Impact | ↑ ~1.2% margin expansion within 12 months |
| Participation Rate | 85–90% engagement; immediate boost in retention and morale |
Accelerated cash flow recovery with no P&L cost
Improved DSCR and underwriting profile for credit partners
Enhanced employee satisfaction without direct wage increases
Conclusion:
From a private equity perspective, this program offers immediate bottom-line benefit, creating a no-cost EBITDA lever that drives value creation. For family offices, it preserves cash, enhances workforce stability, and reinforces a people-first legacy—without diminishing returns.
Use Case: Risk-Adjusted Capital Strategy to Enhance Exit Multiples and Legacy Value
Building on the preventive care platform, we integrated a Private Enterprise Risk Insurance Structure via Madison Insurance Group in Year 2 of ownership. This strategy converts unrecoverable insurance expenses into retained capital assets via Segregated Asset Plans (SAPs)—mitigating enterprise risks typically uninsured in the commercial market.
| Area | Preventive Care Impact | Private Insurance Impact |
|---|---|---|
| EBITDA Lift | ↑ ~$1.34M annually (payroll tax recovery) | ↑ ~$600K annually (reduction in net insurance outflows) |
| Total SAP Capital Retained | N/A | ↑ ~60% of annual premiums → $2.4M in 4 years |
| Enterprise Risk Coverage | N/A | Cyber, brand damage, regulatory, vendor loss |
| Liquidity & Working Capital | ↑ through tax recovery | ↑ via retained reserves in SAP |
| Exit Value Contribution | ↑ ~6.5x multiple on $1.9M uplift = $12.3M | ↑ equity via capitalized SAP balances |
Strengthened balance sheet with risk-adjusted asset pools
Participated in surplus underwriting profit on low-claim years
Improved buyer confidence and reduced diligence red flags
Increased cash yield and strategic reinvestment flexibility
Conclusion:
This dual-platform approach generated $5.7M in cumulative EBITDA lift and added $15M+ in equity value at exit. For private equity firms, it’s a powerful combination of margin expansion and risk mitigation. For family offices, it delivers capital stewardship, wealth preservation, and resilience across economic cycles.
This is not an expense—it’s a reallocation strategy.
Both structures are cost-neutral or cost-positive, IRS-compliant, and fully operational within 30 days. They convert regulatory burdens and insurance liabilities into high-yield financial tools—serving both near-term ROI and long-term legacy objectives.