Medical Expense Reimbursement Plan
A Medical Expense Reimbursement Plan (MERP) allows Employers to provide funds for employees to pay qualified medical expenses such as deductibles and copayments and dental, vision and drug expenses. Unlike a Traditional Health Reimbursement Arrangement, participants can contribute.
Eligibility
Employers
Employers who offer a Group Health Plan may offer a MERP. The MERP is most frequently used by employers with a High Deductible Health Plan who would like to ease the financial burden on employees.
Participants
Employees must enroll in the Group Health Plan to be eligible for the MERP. Typically, employees will be automatically enrolled in the MERP when they enroll in the Group Health Plan.
Who Can Contribute
Typically, only the Employer contributes. Unlike with a Traditional Health Reimbursement Arrangement, however, the Employer may allow participants to contribute.
Advantages of a MERP
Employers
- A MERP is an Employer-funded (participants can also contribute) account that helps ease the burden of higher employee healthcare costs.
- The Employer decides how much, if any, employees may roll over each year.
- Employer may vary contributions based on level of insurance coverage.
Participants
- MERP funds are tax-free to employees.
- Participants may also contribute.
Versus Traditional Health Reimbursement Arrangement
A MERP is similar to a Traditional Health Reimbursement Arrangement. Below are the key differences.
HRA
MERP
Unused benefits can be carried over to future Plan Years
✓
X
Employees can contribute
X
✓
How it Works
For Employers
The Employer hosts Open Enrollment with employees and enrolls Group Health Plan enrollees in the HRA.
HRA funds are available to employees on the first day of the Plan Year based on how the plan is structured.
EMPOWER administers the Plan and issues reimbursements to employees after claims are filed. Reimbursements are made from an Employer-owned account.
For Participants
Employees are automatically enrolled when they enroll in the Group Health Plan. If allowed in the Plan, employees choose their contribution election to be deducted from their paycheck.
Participants use their insurance or pay out of pocket for eligible expenses
Participants file claims to EMPOWER with the insurer’s benefits summary sheet. EMPOWER reimburses claims conveniently from the Employer’s bank account.
EMPOWER Can Tailor a MERP to Meet Your Needs
Employers can customize their plans with many options, including:
Deductible
- Choose the deductible amount (the amount the participant pays before the MERP pays) for single and family coverage.
- Choose whether the MERP pays out to an individual who has met the single deductible prior to the family reaching their deductible.
Coinsurance
Choose whether the MERP pays at 100% or a different amount after the deductible is met.
Copayment
Choose how the MERP reimburses copayments.
Want the Latest Contribution Limits and Guidelines?
EMPOWER’s Benefits Solutions Guide takes the guesswork out of benefits by providing a comprehensive synopsis of each plan type, as well as comparisons and sample scenarios.
