Unless you’re in the top 1% of earners living and working, healthcare expenses can be a major concern, especially now in the midst of the COVID-19 pandemic. People who aren’t insured can be financially wiped out by one bad accident requiring intensive medical care, and even an ongoing prescription for expensive medication can take its toll.
It’s no wonder that for those, anything that can offer them peace of mind regarding healthcare costs is always welcome. That’s one reason why health insurance is one of the most desirable perks a business can offer, but this can be a costly benefit for a company to provide. One solution to minimize spending is MERP. But what is it, and how can it help?
MERP stands for medical expense reimbursement plan. This is an alternative to fully funded health insurance plans that require a company to pay a premium every month to ensure health coverage for employees. With an MERP, an employee who requires medical assistance gets documentation to confirm the treatment and then pays for it out of pocket. Afterward, they file for the MERP, submitting their documents to the company. The company reimburses the employee for their expenses.
This differs from traditional health insurance coverage in many ways beyond the coverage provided directly by the insurer. However, one of the biggest perks is that the reimbursements made by the company are tax-free.
How Does It Work?
An MERP is useful for allowing employers to have a bit more control over medical expenses. Reimbursements aren’t limitless. The employer sets a monthly allowance for how much they feel comfortable reimbursing employees for. The employees can then sign up for the health plans or other options that the employer offers.
Once employees get treatment, they must provide verifiable documentation to their employers. If the employer sees that everything is satisfactory, the reimbursement is granted.
Who Is Suitable For MERP?
The MERP alternative is a good choice for small and medium-sized businesses. While larger enterprises can easily fund traditional health group plans with sizable monthly premiums for every employee, businesses not at that scale yet may struggle if they take the same route. By setting a monthly allowance for maximum reimbursement, businesses still know what the monthly expense may be. However, it can vary from month to month, especially if none of the employees require treatment in a given period.
An MERP is also suitable for businesses that want to offer alternative incentives. Dental or vision plans, for example, can be assigned to an MERP, giving employers more options to entice quality hires and maintain a healthier, more committed workforce. However, it’s always advised to implement your MERP with expert help, such as a third-party administrator.
If you’re interested in an MERP for your employees, we can help. Visit us today so we can look at your business, find out what kind of coverage and budget you have in mind, and determine the MERP structure that will work best for you.