Q. What tax code authorizes me to deduct money allocated through this program?

A. Section 105 of the Internal Revenue Code authorizes this as a valid expenditure. A MERP is a self-funded deductible account that enables employers to purchase high deductible health insurance polices, and self-insures a portion of the deductible so that employees are exposed to a more traditional deductible amount. Employers can deduct the self-funded part of the plan from their taxes. They do not have to report it as employee income on an IRS Form 1099.

Q. Is it true that a MERP can pay for other medical expenses?

A. We have helped employers assist their workers pay for dental, vision plans, In Vitro Fertilization and braces for their teenagers through MERP

Q. Is a MERP effective only for small businesses?

A. No, these programs work for firms of all sizes. Many major corporations have already structured their health benefits plans so they have MERPS in place. At Diversified Insurance Brokerage Services, Inc., we can meet with your human resources team and accountants to help them review the best way to provide a Section 105 plan for your company.

Q. Should I allow an employee to administer this program for me?

A. No, it’s better to have a professional health benefits plan administrator handle this for your company. This lowers the likelihood of liability in the event there is a dispute over providing health benefit coverage for your workers. This administrator can help you set up formal guidelines so that each worker is aware of the plan’s scope of coverage. He or she can help each business owner understand how to effectively manage the program while meeting the federal guidelines set down for these programs. As part of our scope of services, DEBS can help you find competent third party administration for this employees benefit program.

For assistance at any time call one of our well-trained Account Representatives

1-800-990-3427