MERP ClaimLinx

ClaimLinx Glossary: Medical Expense Reimbursement Plan (MERP)

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.

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.

ClaimLinx Health Insurance Strategy

ClaimLinx Offers a Full-Service Insurance Strategy

ClaimLinx offers more than just a way to provide health insurance to your employees. We offer a holistic solution to give great benefits to employees while saving money for business owners. Our ClaimLinx Solution blends a high-deductible insurance plan with a company-funded medical expense reimbursement plan (MERP). The result is an optimized health insurance plan for everyone at your business. ClaimLinx explains how we make this full-service insurance strategy work in today’s blog.

High-Deductible Health Plan

A high-deductible health plan allows for lower monthly premiums. Lower premiums mean you pay less money to have the health insurance plan in place. Normally, higher deductibles mean employees must pay more money before insurance coverage begins to pay for medical expenses. But ClaimLinx has a different strategy.

In 2019, the IRS defined a high-deductible plan as one with at least $1,350 for an individual or $2,700 for a family. These minimums mean individuals must pay the first $1,350 of medical expenses before the health insurance plan starts to cover certain costs. But ClaimLinx typically chooses plans with deductibles much even higher to really slash expenses on premiums. This is a part of our full-service insurance strategy.

Related Post: What is an employer-sponsored, or self-funded, plan?

MERP

Employers can use a MERP to help fund an employee’s costs before reaching his or her deductible. When paired with a high-deductible plan, MERPs offer a health insurance strategy that is cost-effective for employees and employers. 

For example, John Smith goes to the emergency room for a minor injury and receives a bill for $2,500. His insurance carrier sends him an Explanation of Benefits (EOB) that says he owes the full amount because he has not yet met his high deductible of $3,500. John’s employer, Acme Brick, has a MERP that covers emergency room visits with a $350 copay. That means John only pays $350 instead of $2,500. 

The ClaimLinx Solution is a win for everyone. John Smith experiences lower costs for medical expenses. Also, John’s employer is happy because he can afford to offer such great benefits since the cost of the company’s monthly premiums has gone down so much. Our full-service insurance strategy identifies the optimal combination of high deductible plan and MERP.

Related Post: What Is a MERP?

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. A 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 they also 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.

The ClaimLinx Solution: A Full-Service Insurance Strategy

ClaimLinx is here to find the best possible solution for health insurance at your business. We educate business owners and employees on the best practices for combining health insurance plans with a MERP. Our team provides third-party administration, employer benefits consulting, and complimentary elite services to our clients. Contact ClaimLinx or call toll-free 1-800-858-1772 for more details about our full-service insurance strategy.

Why did my employer purchase a MERP?

Your employer purchased a medical expense reimbursement plan (MERP) because he or she is looking out for your best interests by examining ways to cut costs while still providing you with the same health insurance benefits. Some employers have told us they would not have been able to provide health insurance benefits or would have been forced to severely cut benefits without purchasing a MERP.

Related Post: What is a Medical Expense Reimbursement Plan (MERP)?

What is a MERP?

A medical expense reimbursement plan (MERP) utilizes Section 105 of the tax code, a provision that has been included for more than 50 years. A MERP allows business owners to deduct any portion of a medical expense for its employees. It includes any business with one or more employees, so any sole proprietor is able to take advantage of this code. ClaimLinx can help you find the best way to use a MERP to save money.

Related Post: HSA vs HRA vs MERP

What is the ClaimLinx Simple Option Solution?

The ClaimLinx Simple Option Solution is ClaimLinx’s premier product. It’s our trailblazing solution for purchasing employer-paid benefits at a lower cost.

In the simplest terms, the ClaimLinx Simple Option Solution plan combines a high-deductible insurance plan with a self-funded medical expense reimbursement plan (MERP). It’s taking a regular health insurance plan and mixing it with a self-funded plan to get the best option for employers and workers.

Related Post: What Is a Deductible?

Start with a High Deductible Plan

The high-deductible health insurance plan offers peace of mind. That way the insurance company is responsible for the bulk of bill if an employees has high medical costs. The regular health insurance plan also offers a wide doctors network. That way employees can keep going to the same doctor, specialist or hospital.

Insurance carriers also have contracts for discounts for certain services. With a high-deductible plan, employers and employees can use those discounts to lower the amount for services. The best part is by choosing a high-deductible plan, employers get both of these benefits — a wide network and discounts — at a much lower price.

Then Add a Self-Funded MERP

The problem with a high-deductible plan is it doesn’t have as many important benefits employees need. That’s why we add back the self-funded medical expense reimbursement plan (MERP). ClaimLinx designs each plan to fit the clients needs. We typically mirror the plan employees are currently using. That means workers experience the same deductible and copays. They don’t see a change in their benefits.

That’s all because the MERP, which the company funds, pays for the gap between the high deductible plan and the self-funded plan. We take all that savings on insurance premiums from choosing a high-deductible and bring it back to the employees so they still have great benefits.

Related Post: ClaimLinx Glossary: Medical Expense Reimbursement Plan (MERP)

The ClaimLinx Solution Includes Processing

ClaimLinx is a quality third party administrator. We provide customized service for all medical claims for the self-funded MERP.  It’s a simple process combining the two types of insurance, and it’s all done in-house. First, each claim goes to the insurance carrier of the high-deductible plan. Then it is sent to ClaimLinx, where our experienced processors determine who owes what on any remaining amount for the claim.

Our team takes care of billing the employer and even sends payment directly to providers. We focus on giving each client the same seamless experience as having a traditional plan with a major carrier. See the process at work.

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.