This will give you a rough estimate of your total covered medical expenses for the year. To calculate an appropriate monthly deduction, divide that total by the number of months you'll be enrolled. If you enroll during open enrollment, divide your total estimated expenses by If you enroll mid-year as a newly eligible employee, count the number of months from your effective date of enrollment through December Keep in mind the amount you calculate must fall within the annual limits.

If you retire, leave state service, take an unpaid leave of absence, or experience a reduction in your work hours to an ineligible time base i.

To do so, you must enroll in COBRA within 60 days after the date of one of these events retirement, etc. There are no tax savings on contributions you make under COBRA. Contact your department's personnel office for details. M edical expe nses incurred after you leave active pay status are reimbursable only if you continue contributing to your medical account under COBRA.

If you choose not to continue your contributions, you may only claim reimbursement for eligible expenses incurred before you left active pay status. Permitting Events. Your completed form s must be received at the State Controller's Office by the tenth of the month to be effective on the first of the following month.

If your form is received after the tenth of the month, the effective date will be the first of the next following month. You will be allowed the opportunity to make a one-time, mid-year election change on a prospective basis without a permitting event.

You may stop, enroll or change your current monthly contribution for the Medical Reimbursement Account, Dependent Care Reimbursement Account or both plans. Retroactive changes and refunds are still not permissible under IRS guidelines. Once this one-time exception has been utilized, you must experience a permitting event in order to make another election change.

May enroll in reimbursement account s as newly eligible or, if currently enrolled in a reimbursement account, may increase payroll deduction. New enrollments are not allowed.

May not change reimbursement account s. May enroll in a new plan if your plan no longer is available. Payroll Status Changes. Sign In. You may be trying to access this site from a secured browser on the server.

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Page Content Main. Overview Even with the best of health care plans, there are certain expenses the plans don't cover.

For most employees with out-of-pocket medical expenses i. That's because federal tax law currently allows you to deduct health care premiums and expenses on your income tax form only if your medical expenses for the year exceed 10 percent of your adjusted gross income.

You would need to have very high out-of-pocket medical expenses and a low taxable income to reach that 10 percent level. This section explains the kind of expenses you can pay for with a Medical Reimbursement Account and other important rules of the program.

Please read it carefully. Although a reimbursement account is a great way to lower your taxes and save money for certain expenses, you will forfeit any funds left in your account if you don't claim them by the deadline. You can avoid this possibility by following these simple steps:.

Be sure expenses qualify. Once funds have been deducted from your paycheck and credited to your account, you can only claim them if you or an eligible dependent incurs an expense that's reimbursable under the program. An expense is incurred on the date the service is provided, not when it is billed or paid.

Estimate expenses conservatively. It's better to underestimate costs than overestimate. If you overestimate how much you expect to spend on eligible medical expenses, you'll end up with more money in your account than you can claim for reimbursement. Leftover funds cannot be carried over to the following year.

Meet the deadline for claims. The deadline to submit claims for expenses incurred in the current plan year is June 30 of the following plan year. Please see Deadline to Claim Funds for extensions under the and plan years.

He or she is your child, stepchild, adopted child, or foster child. A child who reaches age 27 at any time during the plan year is not eligible, even prior to their 27th birthday. He or she is your spouse.

There are also special rules defining dependents in cases of multiple support arrangements where no single person provides more than half the dependent's support, children of divorced parents, and persons living outside the United States.

Consult a tax advisor for more information. This may include your domestic partner. Federal law does not recognize a domestic partner unless he or she otherwise qualifies as a dependent under Internal Revenue Code section The diagnosis, cure, prevention, or treatment of a disease affecting any part or function of the body, or Transportation primarily for and essential to this medical care.

If you participated in a medical account in the past, you should still review the IRS rules regarding reimbursable expenses.

A healthcare reimbursement plan isn't health insurance. Instead, it's a way to provide allowances employees can use on their medical expenses, including monthly premiums for their own individual health insurance plans.

The term healthcare reimbursement plan has also been used to describe a type of Section self-insured medical expense reimbursement plan MERP designed for premium reimbursement. The cost of group health insurance plans is increasing year over year, making it an unaffordable option for many small to medium-sized organizations looking to offer employee benefits.

For other employers, group health insurance can be a headache to manage. While options such as high-deductible health plans HDHPs exist to help employers lower their benefit costs, they often leave employees with higher out-of-pocket expenses. Health reimbursement plans are an excellent option for organizations of all sizes because they allow employees to choose the health insurance they want.

With group health insurance coverage, employees may not be able to access their preferred healthcare providers or health systems because they might be out of network. With a reimbursement plan, employees can choose an individual health insurance plan that allows them to access these preferred options.

Health reimbursement plans also allow employees to choose their preferred healthcare providers and which medical expenses they want to get reimbursed, including out-of-pocket expenses. This gives employees more freedom and flexibility than other health benefits.

There are many different healthcare reimbursement plans available for organizations to offer. However, each type can work differently. Many healthcare reimbursement plans are formal arrangements that require legal plan documents , while others are informal health benefits.

Formal healthcare reimbursement plan documents must comply with all applicable federal regulations and include the following details:. Most health reimbursement plans allow employees to submit their medical expenses for reimbursement. Employers or third-party administrators can then approve or deny a request for reimbursement based on the plan's specific rules and regulations.

Once approved, employers reimburse employees up to their monthly allowance. Depending on the healthcare reimbursement option you offer, employees can use them for various healthcare costs, such as the out-of-pocket costs of medical care.

For formal health benefits such as a health reimbursement arrangement HRA , you can only reimburse your employees for qualified medical expenses listed in IRS Publication This generally excludes elective medical procedures in favor of expenses that are a medical necessity.

Health stipends can be used for virtually any medical expense, as there aren't any restrictions on eligible expenses. This can be especially helpful for mental health expenses, as an HRA only allows you to reimburse mental health-related costs if you have a diagnosed mental illness.

HRAs are formal health benefits that allow you to reimburse your employees for qualifying medical expenses, including insurance premiums and out-of-pocket expenses. Instead of relying on per-diem reimbursement rates, employers can set a monthly or annual allowance for employees to use.

Employers then reimburse employees up to their remaining allowance. One of the best features of an HRA is that reimbursements are tax-free for both employers and employees as long as employees have insurance with minimum essential coverage MEC.

If your organization has fewer than 50 FTEs and you don't plan on offering group health insurance, you can provide either a QSEHRA or ICHRA. However, a QSEHRA has an annual contribution limit.

If you want to offer your employees a larger allowance, then an ICHRA might be better. With a QSEHRA or an ICHRA, employees can purchase individual health insurance coverage that works best with their preferred healthcare providers, giving them more coverage options.

You can then reimburse employees for their insurance premiums. Organizations with more than 50 FTEs are considered applicable large employers ALEs. Thankfully, you don't need to offer a group health plan to satisfy the mandate.

An HRA helps you meet this requirement as long as you provide your employees with an allowance that meets minimum value and affordability standards. You can also offer your employees a health stipend.

A health stipend is an informal form of reimbursement with fewer regulations and restrictions than an HRA. A health stipend works similarly to an HRA, where employers can set a monthly allowance for their employees.

This allows employees to be reimbursed for insurance premiums so that they can choose their preferred providers and healthcare systems, as well as out-of-pocket expenses. This greater flexibility allows organizations to offer a stipend to contractors and international workers with ease.

It can also benefit organizations with employees who receive federal advance premium tax credits APTC , as they can use their health stipend while remaining eligible for their tax credits. However, this increased flexibility comes with a cost. Health stipends are taxable under IRS Publication B 1 and must be reported on your employees' W-2s as income.

The rules and regulations surrounding the healthcare industry can be tricky to navigate. If you don't want to manage your health benefit on your own, PeopleKeep can help.

A MERP is a type of Health Reimbursement Arrangement (HRA) that enables employers to fund portions of their employees' health plan deductibles, coinsurance, or You use the money to pay for qualifying medical expenses up to a fixed dollar amount per year. Unused funds may carry over from year to year. For some types of MERPs typically cover a wide range of medical expenses, including doctor's visits, hospital services, prescription medications, and other healthcare-related

Medical expense reimbursement - You can deduct on Schedule A (Form ) only the part of your medical and dental expenses that is more than % of your adjusted gross income (AGI). This A MERP is a type of Health Reimbursement Arrangement (HRA) that enables employers to fund portions of their employees' health plan deductibles, coinsurance, or You use the money to pay for qualifying medical expenses up to a fixed dollar amount per year. Unused funds may carry over from year to year. For some types of MERPs typically cover a wide range of medical expenses, including doctor's visits, hospital services, prescription medications, and other healthcare-related

If you have questions about submitting expenses, expense eligibility, or need help creating or accessing your account, please contact PacificSource by email or call For more information: employee. benefits multco. us , Health reimbursement arrangement is a type of health plan that reimburses out-of-pocket health care expenses incurred by you employee , your spouse or your dependent children.

Skip to main content. Multnomah County Department of County Management Benefits. What is MERP? How Does MERP Work? Begin by estimating your eligible, out-of-pocket health care expenses for the upcoming year.

Use your estimate to enroll in MERP when you are first hired or during open enrollment. The money you elect will be deducted from your paycheck on a pre-tax basis.

Domestic Partners are not considered eligible dependents under federal law; therefore you cannot claim their expenses unless they are a "qualifying relative". You have access to your total annual amount for MERP on Jan. New participants will receive a MERP debit card formerly known as Benny card in the mail, which can be used for eligible expenses.

What are some examples of MERP eligible expenses? There are no tax savings on contributions you make under COBRA. Contact your department's personnel office for details. M edical expe nses incurred after you leave active pay status are reimbursable only if you continue contributing to your medical account under COBRA.

If you choose not to continue your contributions, you may only claim reimbursement for eligible expenses incurred before you left active pay status. Permitting Events. Your completed form s must be received at the State Controller's Office by the tenth of the month to be effective on the first of the following month.

If your form is received after the tenth of the month, the effective date will be the first of the next following month. You will be allowed the opportunity to make a one-time, mid-year election change on a prospective basis without a permitting event.

You may stop, enroll or change your current monthly contribution for the Medical Reimbursement Account, Dependent Care Reimbursement Account or both plans. Retroactive changes and refunds are still not permissible under IRS guidelines.

Once this one-time exception has been utilized, you must experience a permitting event in order to make another election change. May enroll in reimbursement account s as newly eligible or, if currently enrolled in a reimbursement account, may increase payroll deduction.

New enrollments are not allowed. May not change reimbursement account s. May enroll in a new plan if your plan no longer is available. Payroll Status Changes. Sign In. You may be trying to access this site from a secured browser on the server.

Please enable scripts and reload this page. Skip to main content. Skip Ribbon Commands. Turn on more accessible mode. Turn off more accessible mode. Turn off Animations. Turn on Animations.

Stay Here Redirect Me. Navigation Toggle hidden item. Annual Leave Comparison Chart Excluded Employee Leave Buy-Back Program Family Leave Leave Reduction Plan Personal Leave Program Long-Term Care Long-Term Disability Insurance Military Leave Civil Service Examinations Employment Eligibility Lists Health Benefits How Does Time Off Work?

Is Travel Time Covered? Military Leave by Conflict Relevant Government Codes and Statues Retirement Benefits Right of Return Rights to Benefits Social Security Benefits State Agencies - Who's Responsible? Types of Military Leave Veterans' Information What are the Time Limits for Reinstatement?

Benefits Orientation Essential Benefits and Services Optional Benefits and Services Automatic Benefits and Services Other Benefits Information New Employee Benefits Orientation Forms What Forms Do I Need?

Benefits Orientation Essential Benefits and Services Automatic Benefits and Services Optional Benefits and Services Other Benefits Information New Employee Benefits Orientation Forms What Forms Do I Need?

Page Content Main. Overview Even with the best of health care plans, there are certain expenses the plans don't cover. For most employees with out-of-pocket medical expenses i. That's because federal tax law currently allows you to deduct health care premiums and expenses on your income tax form only if your medical expenses for the year exceed 10 percent of your adjusted gross income.

You would need to have very high out-of-pocket medical expenses and a low taxable income to reach that 10 percent level. This section explains the kind of expenses you can pay for with a Medical Reimbursement Account and other important rules of the program. Please read it carefully. Although a reimbursement account is a great way to lower your taxes and save money for certain expenses, you will forfeit any funds left in your account if you don't claim them by the deadline.

You can avoid this possibility by following these simple steps:. Be sure expenses qualify. Once funds have been deducted from your paycheck and credited to your account, you can only claim them if you or an eligible dependent incurs an expense that's reimbursable under the program. An expense is incurred on the date the service is provided, not when it is billed or paid.

Estimate expenses conservatively. It's better to underestimate costs than overestimate. If you overestimate how much you expect to spend on eligible medical expenses, you'll end up with more money in your account than you can claim for reimbursement.

Leftover funds cannot be carried over to the following year. Meet the deadline for claims. The deadline to submit claims for expenses incurred in the current plan year is June 30 of the following plan year. Please see Deadline to Claim Funds for extensions under the and plan years.

He or she is your child, stepchild, adopted child, or foster child. A child who reaches age 27 at any time during the plan year is not eligible, even prior to their 27th birthday. He or she is your spouse. There are also special rules defining dependents in cases of multiple support arrangements where no single person provides more than half the dependent's support, children of divorced parents, and persons living outside the United States.

Consult a tax advisor for more information. This may include your domestic partner. Federal law does not recognize a domestic partner unless he or she otherwise qualifies as a dependent under Internal Revenue Code section The diagnosis, cure, prevention, or treatment of a disease affecting any part or function of the body, or Transportation primarily for and essential to this medical care.

If you participated in a medical account in the past, you should still review the IRS rules regarding reimbursable expenses. These rules change periodically causing some expenses that once were reimbursable to now be ineligible, and expenses that were not eligible to become eligible.

C ontact ASIFlex at if you have questions about reimbursable expenses. Your deadline to incur expenses maybe earlier if you lose eligibility during the plan year. You must be enrolled as of December 31 to be eligible for the extension through March Please see Extension of Benefits for extensions under the and plan years.

If you enroll during an open enrollment period, your effective date of enrollment is January 1, of the following year. If you enroll as a newly eligible employee, see "Deadline for newly eligible employees to enroll," for effective dates of mid-year enrollments.

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Medical expense reimbursement - You can deduct on Schedule A (Form ) only the part of your medical and dental expenses that is more than % of your adjusted gross income (AGI). This A MERP is a type of Health Reimbursement Arrangement (HRA) that enables employers to fund portions of their employees' health plan deductibles, coinsurance, or You use the money to pay for qualifying medical expenses up to a fixed dollar amount per year. Unused funds may carry over from year to year. For some types of MERPs typically cover a wide range of medical expenses, including doctor's visits, hospital services, prescription medications, and other healthcare-related

Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.

These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include the costs of medicines and drugs that are prescribed by a physician.

Medical expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don't include expenses that are merely beneficial to general health.

For more information about whether costs related to nutrition, wellness, and general health are medical expenses under section of the Code, see Publication , Medical and Dental Expenses PDF and Tax Topic , Medical and Dental Expenses.

For more information about HSAs, FSAs, Archer MSAs, and HRAs, see Publication , Health Savings Accounts and Other Tax-Favored Health Plans PDF. A1: Yes, because the dental exam provides a diagnosis of whether a disease or illness is present.

A3: Yes, because the physical exam provides a diagnosis of whether a disease or illness is present. A7: Yes, if the therapy is treatment for a disease. For example, an amount paid for therapy to treat a diagnosed mental illness is a medical expense, but an amount paid for marital counseling is not.

A8: Yes, but only if the nutritional counseling treats a specific disease diagnosed by a physician such as obesity or diabetes.

Otherwise, the cost of nutritional counseling is not a medical expense. A9: Yes, but only if the program treats a specific disease diagnosed by a physician such as obesity, diabetes, hypertension, or heart disease. Otherwise, the cost of a weight-loss program is not a medical expense.

A Yes, but only if the membership was purchased for the sole purpose of affecting a structure or function of the body such as a prescribed plan for physical therapy to treat an injury or the sole purpose of treating a specific disease diagnosed by a physician such as obesity, hypertension, or heart disease.

Otherwise, the cost of a gym membership is for the general health of the individual and is not a medical expense. A No, because the exercise, even if recommended by a doctor, is only for the improvement of general health.

A Yes, but only if 1 the food or beverage doesn't satisfy normal nutritional needs, 2 the food or beverage alleviates or treats an illness, and 3 the need for the food or beverage is substantiated by a physician.

The medical expense is limited to the amount by which the cost of the food or beverage exceeds the cost of a product that satisfies normal nutritional needs. If any of the three requirements is not met, the cost of food or beverages is not a medical expense.

A Yes. Except for the cost of insulin, the cost of a drug that isn't prescribed by a physician is not a medical expense that is deductible under section of the Code. However, the cost of over-the-counter drugs and also menstrual care products may be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA.

A Yes, but only if the supplements are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.

Otherwise, the cost of nutritional supplements is not a medical expense. Home File Individuals Frequently asked questions about medical expenses related to nutrition, wellness, and general health.

More In File. Q1: Is the cost of a dental exam a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?

added March 17, A1: Yes, because the dental exam provides a diagnosis of whether a disease or illness is present. The MERP thus acts as a supplemental mechanism, bridging any financial gaps in coverage and helping to alleviate the healthcare cost burden on employees.

They simply use the credit card provided by the MERP, which is pre-loaded with their designated funds. This simplifies the process and avoids the need for collecting and submitting receipts or explanations of benefits for every transaction.

However, for larger claims, the MERP may require additional substantiation. In such cases, employees are expected to provide Explanation of Benefits from the insurance carrier of the group health plan. This substantiates that the expense was approved by the insurance carrier, thus allowing the MERP to cover its share of the out-of-pocket costs.

To ensure efficiency and maintain a clear boundary between employer responsibilities and plan administration, a dedicated MERP administrator is typically engaged. This entity is responsible for overseeing the day-to-day operations of the MERP, including the verification of charges for eligibility under the group health insurance plan.

The administrator ensures that only qualified expenses are approved for reimbursement. The utilization of a dedicated administrator serves to alleviate the administrative burden from the employer, allowing them to focus on core business activities while still offering a valuable health benefit to employees.

One of the benefits of a MERP is its ability to simplify the payment process for eligible healthcare services. Employees are provided with a dedicated MERP card, which is pre-loaded with their allocated funds. This card can be used to directly pay for healthcare services at the point of use, avoiding the necessity for the employee to make out-of-pocket payments and then wait for reimbursement.

The MERP administrator manages the operational aspects of the MERP, including activities such as loading funds onto the MERP cards, coordinating transactions, and ensuring compliance with necessary federal regulations.

This level of oversight ensures that the MERP operates smoothly, provides employees with a user-friendly experience, and promotes the effective use of healthcare resources.

MERPs are an exceptional choice for companies aiming to balance cost-effective healthcare management with high-quality employee benefits. Their greatest impact is felt by businesses that already prioritize offering superior benefits. By integrating a MERP, these companies can adopt a less expensive plan with a higher deductible as the base health insurance , and utilize the MERP to bridge the coverage gap.

This results in substantial cost savings while preserving exceptional coverage for employees. The unique strength of MERPs lies in their flexibility—they can be tailored to meet specific coverage needs, regardless of the company size or structure.

By defining eligible expenses in line with the group health insurance plan, the administrative process is streamlined. Employers also have the capacity to cap contributions to the MERP, ensuring controlled healthcare spending.

However, for companies with already high deductibles, a transition to a cheaper plan supplemented by a MERP may not be feasible since there may not be a lower cost underlying plan available. Notably, the financial efficiency of a MERP depends largely on the quality of the existing health plan.

Businesses offering comprehensive benefits, such as lower deductibles and copays, can realize significant savings by transitioning to a more affordable plan and using a MERP to cover any coverage shortfalls. In these cases, the value of a MERP is realized through its ability to cover up to all out-of-pocket costs for employees, facilitated by the cost savings from the underlying health plan.

Alongside the benefits of fiscal control and customization, MERPs offer attractive tax advantages, further boosting their appeal. Thus, a well-implemented MERP can lead to substantial financial savings, simultaneously ensuring employees continue to enjoy quality healthcare coverage—a win-win situation for all involved.