A medical expense reimbursement plan (MERP) is part of the ClaimLinx Solution. A MERP allows business owners to make a tax-deductible contribution to employees’ medical expenses. Our employer benefits consultants combine a high-deductible health insurance plan from a national carrier with a MERP. This arrangement gives both workers and owners an optimal choice for health insurance benefits. Today’s ClaimLinx blog defines and explains how a MERP works with regards to health benefits.
Short Definition of a MERP
A MERP lets business owners deduct any portion of medical expenses paid by the company or employees for their medical care. The idea is to reduce the out-of-pocket expenses that employees pay for medical care before health insurance starts to cover the costs. Contributions to these costs lower the amount of money the IRS calculates for a business’s income taxes. ClaimLinx helps you find the optimal funding levels for MERPs to give you the best way to provide health insurance for workers.
Related Post: Why did my employer purchase a MERP?
Example of How a MERP Works
Suppose ClaimLinx has determined a plan with a $3,500 deductible works best for your company. That means the employee would normally pay $3,500 before the health insurance coverage starts paying for his or her medical care. A MERP can help lower someone’s up-front costs for medical care. ClaimLinx designs a custom schedule of benefits for you and your employees based on medical needs and company budget. In this case, the employee would actually have a much lower deductible and may even experience copays for regular visits and procedures. Business owners receive the tax deduction only when an employee has a qualified medical expense when they pay part or all of the medical expenses.
Why Employers Need a MERP
All the time, employers tell ClaimLinx they would not be able to have viable health insurance benefits without a MERP. Small businesses often have slimmer margins and can’t afford good benefits when premium costs go up. MERPs allow employers to keep offering great benefits on a smaller budget. When you take the administration of first-dollar benefits like copays for office and specialist visits away from the insurance company, you don’t have to pay as much for those benefits. The flexibility of MERPs let companies fund their employees’ medical expenses based on the budget and needs. And as a bonus, MERP funds transfer from year to year. So a company can build up funds over time.
Related Post: HSA vs. HRA vs. MERP
The benefit to the company is also that MERPs lower the income that goes towards a tax liability. For example, a business owner has $500,000 in income in one year. The owner has $10,000 of qualified expenses he reimbursed for employees through the funding program. The owner does not pay income taxes on the $10,000 he contributed to that fund. At a 23.6 percent tax rate, the business owner pays $2,360 less in taxes for that $10,000.
How This Strategy Saves Money
A high-deductible health plan lowers the monthly premiums for each employer. Instead of paying $1,000 per month for a family’s coverage, an employer might pay $700.
The MERP continues the savings because it’s a tax deduction. Every time an employer reimburses an employee’s medical expenses, it lowers the amount of money the IRS figures into business taxes. Business owners not only pay lower income taxes, but also they lower onboarding costs by retaining employees for longer periods of time.
Employees who remain healthier are more productive and miss less work. ClaimLinx shows you how we deliver for both business owners and employees with our full-service insurance strategy.
ClaimLinx Navigates MERPs for You
The employee benefits consultants at ClaimLinx help business owners select the correct funding levels for MERPs, so employees save money on health insurance costs. Not only do owners lower their costs, but they also help retain employees with lower-cost employer-paid benefits. Contact ClaimLinx or call toll-free 1-800-858-1772 for more details on our ClaimLinx Solution.
The ClaimLinx Solution Fits You
The ClaimLinx Simple Option Solution plan is different for each client. The self-funded plan is customized for each company. ClaimLinx chooses each high-deductible to fit each clients specific needs. It’s a way to provide great benefits without paying high premiums to a health insurance company for services employees are not using.
ClaimLinx offers the ClaimLinx Solution to help lower your health insurance rates. Our experienced health benefits consultants can find you the best possible rates on employer-paid benefits while also educating your workers on how to save money on healthcare costs. Schedule a Meeting or call toll-free 1-800-858-1772 to see what we can do.
