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, along with dental, vision and drug expenses.
The MERP is also known as a Group Coverage HRA (GCHRA) or an Integrated HRA.
A Flexible Benefit for Your Employees
A Medical Expense Reimbursement Plan (MERP) is a powerful, employer-funded benefit that helps employees manage their healthcare costs by reimbursing them for medical expenses not covered by their group health insurance plan. As an employer, offering a MERP allows you to provide a flexible, cost-effective way to support your employees’ healthcare needs while offering tax advantages for both you and your workforce. Here’s what you need to know about sponsoring a MERP.
What is a MERP?
A MERP is an employer-funded benefit that reimburses employees for eligible healthcare expenses not covered by their primary health insurance plan. It is designed to complement your company’s group health insurance offering, helping to cover additional out-of-pocket medical costs that employees may incur.
Key Features:
- Employer-funded: The employer contributes funds to the MERP, which employees can use for qualified medical expenses.
- Tax-advantageous: Employer contributions to a MERP are tax-deductible, and reimbursements are tax-free for employees when used for eligible expenses.
- Customizable: Employers have flexibility in determining the types of expenses covered and how much is reimbursed annually.
- No Impact on Employees’ Taxable Income: Employees do not pay taxes on the money they receive through the MERP for eligible medical expenses.
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How it works for Your Employees
When you offer a MERP, employees can submit claims for reimbursement for out-of-pocket medical expenses that are not covered by your company’s primary health insurance plan.
The MERP can cover a wide range of healthcare costs, depending on how the plan is structured.
Employer Contributions
Eligible Expenses
Accessing Funds
Eligible Expenses
Some examples of eligible expenses include:
Medical Expenses
- Deductibles, copayments, and coinsurance
- Prescription medications and certain over-the-counter drugs
- Doctor visits, hospital stays, and surgeries
- Preventive care, such as immunizations and screenings
Dental and Vision Expenses
- Routine dental checkups, fillings, and orthodontics
- Vision care, including eye exams, glasses, and contacts
Other Qualified Healthcare Costs
- Chiropractic services, mental health counseling, and physical therapy
- Medical supplies, such as bandages, crutches, and glucose monitors
Advantages of a MERP
Employers
- A MERP is an Employer-funded account that helps ease the burden of higher employee healthcare costs.
- The Employer decides how much, if any, employees may roll over each year.
- The Employer may vary the MERP contributions based on level of insurance coverage.
Participants
- MERP funds are tax-free to employees.
How it Works
For Employers
The Employer hosts Open Enrollment with employees and enrolls Group Health Plan enrollees in the MERP.
HRA funds may be available to employees on the first day of the Plan Year, depending on how the Plan is structured.
EMPOWER administers the Plan and issues reimbursements to employees after claims are filed. MERP reimbursements are made from an Employer-owned account.
For Participants
Employees are automatically enrolled in the MERP when they enroll in the Group Health Plan.
Participants use their insurance or pay out of pocket for eligible expenses.
Participants file claims to EMPOWER with the insurer’s benefits summary sheet or explanation of benefits. EMPOWER reimburses claims conveniently from the Employer’s bank account.
Tailored an HRA to Meet Your Needs
Employers can customize their plans through many options, including:
Deductible
Choose the deductible amount (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 handles copayments.
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