Medical Expense Reimbursement Plan (MERP 105 c, h)
Diversified Employee Benefit Services helps businesses save money with MERP 105 c, h.
Your employees’ health and well-being directly impacts your company’s productivity and success. Because we understand this so well, Diversified Employee Benefit Services offers Medical Expense Reimbursement Plans (MERP 105 c, h) covered under Section 105 c of the IRC code.
These flexible options allow employers to reimburse employee out-of-pocket medical expenses. MERP 105 c, h is employer-funded, controlled, and 100% tax deductible; non-income to insured employees and dependents. As a more customizable plan, the MERP 105 c, h plays a vital role in managing rising healthcare costs for both employers and employees. Employers can fund several aspects of their employees’ health benefit plan deductibles, coinsurance, copays, and other qualified medical expenses.
MERP is an IRS-approved health plan where employers reimburse employees for out-of-pocket medical expenses. It can be used alongside a group health insurance plan. Employers set allowance amounts for each employee. This allowance represents the maximum amount an employer will reimburse the employee for health care expenses, deductibles, co-pays, and prescriptions.
Medical Expense Reimbursement Plans are facilitated in a three-step process:
The Advantages of MERP 105 c, h
For employers, MERPs control costs and increase retention. Companies define annual limits with clear visibility into plan utilization and metrics. With a focus on reducing the cost of premiums, MERPs are usually associated with healthcare plans that have higher deductibles.
To better understand how MERP 105 c, h provides savings within a benefit plan, consider the following scenario:
For a company of 100 employees, the monthly medical premium was $750 per employee per month (PEPM), with an annual medical deductible of $1,500. That means a staggering $900,000 annually.
Diversified Employee Benefit Services drafted a proposal to reduce the monthly premium with a high annual deductible plan of $6,000. While this is an increase in the annual medical deductible, it lowers the monthly premium to $450 PEPM.
Under this formula, the company now sees over $300 in savings per employee per month, resulting in an annual cost of only $540,000. DEBS allows businesses to offset high deductible programs by saving the difference between a low deductible with a higher premium vs. a high deductible with a lower premium.
Have More Questions?
How can I enhance my MERP 105 c, h benefit?
Because MERP 105 c, h is so flexible, businesses can add to its benefits with increased funds based on employee tenure and classing by job type.
What is the difference between an HRA and a MERP 105 c, h?
A Health Reimbursement Account (HRA) is an arrangement between the employer and employee. Employers fund the MERP program to reimburse the employee for specific medical expenses after filing the required paperwork. A well-planned HRA can reduce the cost of overall healthcare spending, however, it only covers the cost of deductibles and coinsurance.
An MERP 105 c, h, on the other hand, is more flexible. Employers and employees can create multiple plan designs with multiple benefits. The employee is directly reimbursed tax-free for all expenses up to a pre-decided amount for pre-qualified services/products. The employer also benefits from a lower cost of group health insurance.
If you value flexibility and cost control, a MERP might be the choice. Whereas HRAs, on the other hand, are more structured.