The decision to use medical insurance reimbursement plans (MERPs) or not in your business requires a lot of consideration. It is important to understand if this will save you money in the long run and if you will be able to deduct the expenses on your taxes in the next year.
What Is a MERP?
A medical expense reimbursement plan helps reduce your employees’ costs when it comes to paying for doctor’s visits, prescription medications, hospital stays, and various types of treatment. MERP deductions happen because you as an employer contributes to these costs directly. In turn, you are able to take the money off of your tax expense when it comes time to pay income taxes for your business itself.
While this sounds very attractive because you get to pay less taxes overall, you still need to meet all the qualifications necessary to use one of these programs. Consider getting help from a ClaimLinx consultant to help navigate the process of signing up and using one yourself.
MERP Tax Information
There are multiple ways to get tax deductions when it comes to medical care and health insurance plans as an employer. Small businesses with less than 50 employees get specific rules that apply to them. In general, any company that pays for at least half of employee premium costs can use that total amount to get deductions to help them minimize their tax responsibilities.
When MERPs are involved, rules about specific plans in writing and contractual agreements apply, but these would exist anyway to make sure all workers understood their health coverage. When the terms of this reimbursement plan are met, employers can use the amount they pay as tax deductions.
To answer the initial question, you know you can enjoy a MERP deduction when you avail yourself of this amazing opportunity to save money in your business. As long as you qualify for the specific plans and pay according to the contractual agreement, you can save on taxes every year.
The decision about what type of plan to offer and the specific coverage options for the people who work for your company includes some degree of complexity. You want to get as many tax deductions as possible to minimize costs and payment requirements.
One way to simplify your options and the administration of the MERP is to use a third-party administrator like one from ClaimLinx. Besides getting full employer health benefits consulting services to make the right choice in the beginning, you can also enjoy the convenience and affordability of having an outside consultant manage the plan itself.
You have enough responsibilities of operating your business smoothly and ensuring future profits. Let the health coverage and medical insurance reimbursement plan experts handle both the employee and business side going forward. We provide education for the workers so they fully understand their responsibilities and savings, access to local customer service, full employer reports and claims assistance, and so much more.