What Is a MERP and How Does It Work?
A MERP, or Medical Expense Reimbursement Plan, is an employer-sponsored benefit plan that helps employees cover eligible medical expenses. It is a type of reimbursement plan that allows employees to receive reimbursement for out-of-pocket medical costs incurred during the plan year.
In a MERP, the employer establishes the plan and sets the rules and guidelines for eligible expenses and reimbursement. Employees contribute to the plan through pre-tax payroll deductions, reducing their taxable income. When employees incur medical expenses, they submit claims along with supporting documentation to the plan administrator for reimbursement.
The plan administrator, such as The Difference Card, reviews the claims to ensure they meet the criteria outlined in the plan documents. Once approved, eligible expenses are reimbursed to the employee according to the reimbursement process specified in the plan.
Additionally, some services like copays can be swiped directly at the doctor’s office on the employee’s Difference Card Mastercard.
MERPs typically cover a wide range of medical expenses, including doctor’s visits, hospital services, prescription medications, and other healthcare-related costs. However, it is important to note that specific expenses and reimbursement limits may vary depending on the plan design.
Employers have flexibility in designing the MERP to suit their needs. They can determine the contribution amounts, establish guidelines for eligible expenses, and choose the reimbursement process that aligns with their administrative capabilities.
MERPs are subject to compliance with applicable regulations, such as the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA). Employers must ensure that the plan meets the necessary legal requirements to maintain its tax-favored status. The Difference Card offers complimentary compliance services to support clients and protect them from penalties.