MERP vs. HRA

A Medical Expense Reimbursement Plan, also known as a MERP, is a form of a Health Reimbursement Arrangement (HRA) where the employer funds an account to pay for eligible member expenses, including card swipes and/or manual submissions, on a tax free-basis.

A Health Reimbursement Arrangement, or an HRA, is an employer-funded medical reimbursement plan. The employer withholds a specific amount of pre-tax dollars for employees to pay for health care expenses on an annual basis. An HRA typically only reimburses deductible & coinsurance expenses.

A MERP allows for a lot more flexibility. A Medical Expense Reimbursement Plan allows for multiple member plan designs, which can be achieved from a single underlying carrier plan.

The full cost of a MERP plan can be shared with employees:

  • Premium equivalent rates
  • Contributions modeling
  • Consultative approach

For an HRA, to achieve multiple member designs, a single underlying carrier plan must be aligned with a single reimbursement design.

For an HRA, only the carrier plan costs can be split with employees. A true HRA must be 100% employer funded:

  • Higher employer costs
  • No COBRA rate equivalents
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