Medical Expense Reimbursement Plan (MERP)
MERP Plans are sanctioned under Section 105 of the IRC. A MERP is a type of Health Reimbursement Arrangement (HRA) that enables employers to fund portions of their employees’ health plan deductibles, coinsurance, or copayments, as well as, cover the cost of other qualified medical expenses on a tax-free basis. MERP Plans are commonly utilized with higher deductible plan designs, giving the employer the flexibility to create multiple plan designs under one purchased plan to meet their employee’s needs.
Why would my Employer Choose to Utilize a MERP Plan?
This is a very good question! Bottom line is that your employer genuinely cares about you, the employee. They are using a MERP Plan to help retain a quality benefit package, while continuing to try and contain your cost. Buying health insurance is very comparable to buying auto insurance, the higher the deductible, the cheaper the premium. When looking at buying higher deductible products from the insurance carriers, your employer is able to stabilize the cost to you and keep your benefit rich.
Another reason that your employer is implementing the MERP Plan, is because they would like to have you involved in understanding your healthcare expenses. Under the MERP Plan arrangement, you are responsible for reviewing your EOB and submitting them for reimbursement. While it may seem cumbersome to have to send in your EOB’s, it is your duty to review and make sure that the appropriate services are reflected. When you start to review your EOB’s and understand the claims process, you start to become a better consumer and advocate for your healthcare. BDS is here to assist you the whole way through the process, if you are ever confused about what to do, please contact us and we will walk you through exactly what you need to do.
How a MERP Works
Under a typical MERP situation, let’s use an easy example to walk through the process.
ABC Employer is currently paying extremely high premiums to offer a $500/$1,000 Deductible plan to their employees. After learning about the MERP Plan, they decide to purchase a $5,000/$10,000 Deductible Plan, but still offer the $500/$1,000 to their employees; ABC Employer will be funding the difference between the Employee deductible to the purchased plan deductible, $4,500/$9,000.
John Smith, an employee of ABC Employer, has a surgery that costs $15,000, since he is under the $5,000 Deductible, his responsibility would be $5,000. After the surgery, John receives and Explanation of Benefits (EOB) from the insurance company that says his responsibility is $5,000. John sends the EOB into BDS and we process the claim and send him reimbursement for $4,500, since he is responsible for the first $500 of deductible. John will then receive a bill from the provider for $5,000 which he will pay, using the $4,500 of reimbursement from the company and his out-of-pocket of $500 for his deductible.
This is one of the most common questions we receive: “How does the reimbursement process work?” In general, the reimbursement process is very smooth and easy, but it comes down to understanding how a claim is processed. If you see a provider and have an applicable deductible service provided, MRI, Surgery, Labwork, etc., the provider will send that particular procedure off to the insurance company to have the network discounts applied to the claim. After the carrier applies the network discounts, you will receive an Explanation of Benefits (EOB), with brief detail of the services provided, as well as, an amount that will appear under the Deductible column as your responsibility. Remember, the EOB is not a bill, it is simply communication from the insurance company on the service you were provided explaining their responsibility and yours under the health plan. Once you receive the EOB, please immediately send to BDS for processing. We will calculate your deductible and send you any reimbursement once you have exceeded your responsibility. In 95% of the cases, you will receive the EOB long before you receive the bill from the provider. If you send your EOB to BDS, you will have any reimbursement you are owed in your hands, long before receiving the bill from the provider.
*Please review the Reimbursement Process page for further details on MERP Reimbursements through BDS.
Download Flowchart for a visual overview on the process.
We are here to assist you with any and all questions that you may have. Please, if you are ever unsure of what to do, contact our office. Our staff is very well versed in helping you understand your benefits and walk you through the entire reimbursement process. Click here for our contact information.