Introduction:
A great measure toward monitoring health plan expenses annually is planning to design a medical reimbursement plan.
Nowadays, many new health benefits plans are made available for employers. Most employers seem more interested particularly in Medical Expense Reimbursement Plans which are also called Medical Reimbursement Accounts (MRAs).
A MERP is a way that allows an employer to give a certain amount of money to each employee of the corporation every month.
An employer must make a lot of savings in the first year of implementing the medical expense reimbursement arrangement and then aim to continue stabilizing those costs with each renewal.
With the amount of money reimbursed to employees, they and their families have the benefit to get tax-free healthcare services.
Do you want to create a health benefit plan for your employees? This article explains Medical Expense Reimbursement Plans- their benefits, reporting, and more.
What does MERP stand for?
To define MERP, it is vital to understand what it stands for. MERP stands for Medical Expense Reimbursement plan. A reimbursement plan is not an insurance policy rather a health benefit plan or classification in which a business repays or reimburses its employees to pay medical expenses of their dependents and them.
If managed properly, an employee is paid all reimbursements 100 percent tax-free.
It offers both employers and employees a way to save 50 percent with costs of healthcare expenses. Health reimbursement plans and group health insurance plans can be used simultaneously or only MERP can be offered as the key health advantage plan instead of a group healthcare insurance plan.
Listed below are three main types of these health expense reimbursement plans.
- Health Reimbursement Arrangements (HRAs)
Health reimbursement arrangements are employer-sponsored, tax-exempt health benefit plans offered to employees to repay for their qualified medical costs.
- Flexible Spending Accounts (FSAs)
FSAs are also employer-funded, tax-free health reimbursement plans offered to employees for eligible medical costs.
- Health Savings Accounts (HSAs)
HSAs are individually-owned bank accounts of employees that enable them to take advantage of tax-exempt reimbursement or payment of qualified healthcare costs.
MERP Meaning and What it Includes
As MERP means a medical expense reimbursement plan, such healthcare reimbursement plans are employer-sponsored, tax-advantaged benefit plans that allow corporations to provide medical allowances to their out-of-pocket employees.
MERP and Health Reimbursement Account (HRA) may sound similar. While an HRA is a more commonly used term that refers to owning an individual account, medical reimbursement plan does not include having a physical account linked to it.
Instead, it is the responsibility of a business to reimburse any health expenses of an employee when medical services are obtained.
Here are some important details about these plans.
- Employers only contribute the sum they want to pay so that the cost of a medical reimbursement policy does not increase every year.
- At first, employees make payment for their clinical examination and medicine, then the employers reimburse them.
- Medical Reimbursement Plans are extremely flexible so it becomes difficult to say precisely how they have to be used.
As these plans are extremely flexible, they allow businesses to put forward any kind of suitable arrangements. Therefore, health expense reimbursement plans are often linked with healthcare plans with higher non-taxable allowance.
This will not only help employers and employees to economize on the amount of their premium but also more medical benefit plans will continue to be offered to the employees.
MERP differs from HRA. While the former is a plan, the Medical Reimbursement Account (MRA) is an account with medical funds that can be used for qualified healthcare costs incurred by the business for its employees and their families.
Benefits of MERP
Control:
The employer decides and manages exactly how much money he wants to provide to employees and how that money will be spent. The responsibility and cost-sharing of every employee are designed by their employers.
Tax-Savings:
Medical reimbursement or any other refunds to employees are tax-free and the assistance employers offer are tax-deductible business costs. Nevertheless, an employer can claim a tax deduction when a claim has been refunded.
Freedom:
It’s easy for employers to establish or shift insurance plans without switching to a new reimbursement plan administrator. With Folio3’s Expense Management App for MS DYNAMICS 365 & AX, you can regulate your expenses efficiently from anywhere in the world.
Flexibility:
The funds can be even used to spend on different medical expenses which are not included in health plans like copayments, coinsurance, deductibles, prescriptions, vision, and dental care.
To motivate employees to be better consumers, a health expense reimbursement plan provides employers with the ability to make a plan possible and gives them flexibility at focusing on the most beneficial part of their current health plan.
How does a MERP work?
A Medical Reimbursement Plan usually works in the following five-step process:
- Employers Set a Certain Funding Amount
Employers set a certain monthly funding amount for each worker with a MERP. That sum is the maximum amount an employer will reimburse to any employee for their healthcare expenses for each month.
- Employees Purchase Healthcare Products or Services
Any of the staff members purchase healthcare products and services they need using their own money. They can even purchase individual health insurance policies depending on the rules set by the employer and the type of medical benefit plan used.
- Employees Provide Proof of Costs
Once employees make a purchase, afterward they provide evidence in the shape of documentation to their employers. The documents can be payment receipts or descriptions of benefits. Either way, they must contain three things:
- Employee’s name
- The date of paying the expense
- An explanation of the products and services
- Employers Evaluate Employee Evidences
Employers evaluate proofs provided by employees to confirm if the expenses are eligible for reimbursement and the documents contain all required information. In case, any bit of information is missing, they must inform the employee with permission to provide further information.
- Employers Pay Back to Employees
Eventually, if everything is in place, the employer pays back to each employee the amount decided to reimburse.
Medical Expense Reimbursement Plan Rules
The administration of a health expense reimbursement plan must comply with federal regulations. To ensure that, the employer must have documents of section 105 plan, that define the extent of MERP and exactly regulate the plan.
To make this process easier, almost every employer uses a third-party or software provider to establish and supervise the reimbursement plan. Here are a few more types of MERPs.
MERPs Paired with a Group Plan
Employers use MERPs paired with a group healthcare plan which is another way to offer a high-deductible health plan.
A healthcare reimbursement plan linked with a group healthcare plan are commonly known as group HRAs or group coverage HRAs.
Employers generally increase the deductible on the group plan. Depending on their deductible, employees are reimbursed for the difference. With this, the employers save a portion of their group insurance plan using a pre-tax which leads their way to big savings with no changes in coverage.
MERPs Paired with an Individual Plan
Another type of MERP is the individual coverage HRA or ICHRA which functions either as a separate alternative or a stand-alone benefit for health benefit programs of any organization. The employers can offer each group a different health insurance plan, who can choose their coverage; ICHRA to one group of employees and insurance policy to another group of employees.
For instance: employers can offer part-time employees an ICHRA and full-time employees group health insurance.
MERPs For Fields of Vision and Dental
With this MERP, employers can only allow repayment of certain types of costs. When an employer wants to pay an amount for expenses of vision and dental plan without buying costly insurance, they can assign MERP through which they will only reimburse for dental and vision expenses.
Employee Education and Reporting
After choosing a certain design, effective reimbursement plan implementation depends on the two most important phases: Employee Education and Reporting.
Employee Education
Every employee must know what MERP covers, what gap it fills in the health plan, what documentation they have to get from healthcare services to submit to their employers and how they can receive a reimbursement from MERP.
The useful way to educate employees is to conduct in-person meetings in which they’ll be informed about how they can get reimbursement and their concerns regarding the healthcare reimbursement can be addressed from the start of the plan.
This phase is not one time concern but can be made an ongoing process to keep educating employees.
Reporting Phase
Reporting is another important phase of effective MERP execution. Without accurate reporting on claims being reimbursed and deductibles utilized, you lose track of making budget decisions and renovation decisions.
To help you stay on track, Folio3 provides a record of receipts and the least effort to create manual expense reporting. With Folio3’s mobile Expense Management App, managing costs of all your plans is at your fingertips. Viewing and creation of expense reports are also made simple so you can easily modify them to add further details.
Record Expenses in Just 3 Steps
With Folio3’s Microsoft Dynamics AX and 365 Expense Reporting App, you can record all your expenses in 3 easy steps.
Capture and Submission
With Expense Management App, capture and submit invoices, tickets, receipts, and any other expenses.
Quick Approval
Reduce your reimbursement time, easily view and approve expenses from any device with one click.
Reporting
Receive detailed reports on all expenses reimbursed to each employee, partner, or distributor.
The expense management app reduces both the time and effort needed to keep track of constant expenses.
Folio3’s Dynamics AX & 365 Expenses App
Folio3’s Microsoft Dynamics AX and 365 Expense Reporting App is a full-featured app that has been benefiting numerous professionals to capture, determine and execute expense policies seamlessly.
It has many features for users who can view existing cost reports, develop new ones, and quickly submit the reports for approval without any security concerns.
Features for Mobile and Web
With Folio3 Dynamics 365 & AX Expense Management and Travel Requisition App, clients get access to easily manageable expenses reports anytime from anywhere- either through mobile app or web.
Clients can also approve or dismiss individual requests with a single click and even view detailed information about those requests and return with questions or comments.
Moreover, they can also get instantly notified about all expenses via push notifications on all devices.
The Travel and Expense Management Web App is compatible with Dynamic 365, AX, and NAV. Moreover, it works well on the latest versions of all Internet browsers.
Furthermore, through the web platform, customers can create and approve travel requests.
Why choose Folio3’s Dynamics AX & 365 Expenses App?
Fully Customizable:
The Microsoft Dynamics Expense Management App is a fully customizable application. Users are offered lots of custom-tailored features for specific business requirements.
Regular Updates
Their clients love one thing about them that is how they take feedback into account and make regular updates to enhance user experience.
Prominent and Proven
Foilio3’s Dynamics 365 Expense Management App is a tried-and-true app which many international organizations have reviewed and acknowledged. Its client base has expanded over the past 10 years.
Budget-Friendly Assistance Provision
The use of the app does not charge an annual licensing fee and only costs one time during installation and customization. Once you open the app, you can benefit from seamless submissions without any additional costs.
Conclusion
The aim to provide a helping hand to your employees by benefiting them with health plans is an incomplete strategy without a healthcare reimbursement plan.
A MERP is a way through which you, as an employer or a business, give tax-free medical allowances to staff members.
If you are looking for the best way to monitor all your expenses reports in one place, look no further. Microsoft Dynamics AX and 365 bring you an app to view, submit, and approve or reject any reimbursement requests.
Now, you can manage expense reports using your phone or web with incredible features which each version of the expense management app offers.
