Medical Expense Reimbursement Plan


The Medical Expense Reimbursement Plan (MERP) is designed to reverse “external adverse selection.”  MERP is designed as a supplemental medical plan. Generally, those employees who are on the employer’s existing medical plan who are eligible for and entitled to benefits elsewhere are eligible to participate in the MERP.

The MERP reimburses plan participants for deductibles, co-pays and co-insurance for all family participants who once were in the existing medical plan. Generally, the alternative medical plan would be a spouse’s plan or a retirement plan elsewhere. Additionally, if the required contribution in the alternative plan is greater than that required by the existing plan then the delta is reimbursed to the plan participant. If the contribution requirement in the alternative plan is with after tax dollars then the reimbursement is income tax-free.

On average, the MERP Strategy saves an employer approximately 20% on the medical and prescription premiums allowing them to use those savings to pay down corporate debt or institute other fringe benefit programs such as deferred compensation, corporate disability and long-term care programs, etc.

Highlights include:

  • No financial risk to the employer: If costs are not reduced, we do not get paid
  • Flexibility:  Current provider and plan designs can remain the same
  • Time Invested:  Can be implemented anytime without regard to renewals and requires minimal employer time to execute as all plan administration is handled externally
  • Benefits: No reduction in benefits to participants
  • Cost: No increased cost to participants. Participants will have equal or fewer contributions
  • Savings:  Employers on the leading edge have the highest saving potential

Do you want to learn more about MERP? Please contact MAF Companies at (800) 979-9393.