A medical expense benefit plan (MERP) could prove beneficial to employers and workers, as both parties can take advantage of tax incentives provided under Section 105 of the Internal Revenue Code. This type of program allows participants to receive a 100 percent deduction for health insurance. Meanwhile, companies can write off various non-insured dental, medical and vision expenses with MERPs.
Companies and their employees could each save up to 50 percent in some tax instances thanks to these plans. However, it's important for businesses to design and develop MERPs after they assess their needs.
Employee benefit consultants can help during the evaluation process by providing resources and tools to help human resource personnel determine the value of MERPs for their companies. Additionally, employee benefit services will take the time necessary to assess the pros and cons of a variety of dental, medical and vision programs.
What are the advantages of MERPs?
MERPs offer flexibility, which makes them a popular choice for many businesses. They are a great tool to help companies combat the rising cost of healthcare, and can be used in conjunction with a health insurance plan.
For instance, a business might consider offering workers a $5,000 deductible on healthcare. However, the company has the option to buy back the majority of this amount from employees so these staff members will only have to pay a small deductible whenever they need medical care.
This is advantageous in several ways. Workers will not face higher-than-average costs for their medical expenses, yet can still receive high-quality healthcare assistance. Employers can provide top-notch healthcare, which might help make their companies more appealing to job seekers in the future.
While it might appear that the employer could suffer a significant financial loss in the aforementioned scenario, the tax code ensures the amount it pays is 100 percent tax deductible. Employees might not use the entire $5,000 deductible, so the company only has to pay what is used.
Consider the benefits of MERPs when evaluating the option against fully insured traditional healthcare programs. They could help a business and its employees save money.
