MERPS – what are they and how do they help my business?

As health insurance coverage plans increase in premium, more and more businesses are discovering how a Medical Expense Reimbursement Plan or MERP can save them money and provide similar coverage for their valued employees.

Here’s how a MERP really works:

Dr. John Smith has a small medical practice with five employees. He has offered each employee a comprehensive health insurance package with a $200 annual deductible. When faced with a major increase in premium, he realizes that he can’t afford to provide the same coverage under his normal health insurance plan. However, a MERP allows him to self-insure a portion of his employee’s policy by putting money into a Section 105 plan.

This plan offers advantages to both Doctor Smith and his staff. Dr. Smith gets a tax benefit through Section 105. Should he have to pay for medical coverage, he doesn’t have to report these funds given for this coverage as income for his workers.

At Diversified Employee Benefit Services, Inc., we have been designing MERP for businesses since 1976. We believe that it’s the best way to help small businesses compete against bigger businesses. Through a MERP, small business can offer the same scope of health insurance benefits that a Fortune 500 company offers its employees.

There are some administrative issues that an experienced third party administrator should handle to avoid any liability concerns for business owners. At Diversified, we can help you look at your options and determine the best plan of action for health insurance benefits.

Read our FAQ section on MERP