Medical Expense Reimbursement Plan: A Smarter Strategy for Business Owners
Healthcare costs continue to rise, and many business owners feel trapped between unsustainable premiums and unsatisfied employees. But there is a smarter strategy that brings flexibility, savings, and tax benefits together in one powerful tool. That is the Medical Expense Reimbursement Plan, or MERP.
At Pfister Financial Services, we work with business owners who are serious about efficiency.
Are you tired of watching premiums eat into profits while still fielding complaints about coverage? Then a Medical Expense Reimbursement Plan may be the solution you've been looking for.
What Is a Medical Expense Reimbursement Plan?
A Medical Expense Reimbursement Plan is a business-funded health benefit under Section 105 of the IRS code. It allows you to reimburse employees for out-of-pocket medical costs such as deductibles, copays, and prescriptions. These reimbursements are tax-free to employees and tax-deductible for the business.
This means it lets you raise the deductible on your primary insurance plan to dramatically lower premiums. You can then use a Medical Expense Reimbursement Plan to "buy back" those benefits your employees actually use. Instead of paying insurance companies for care your team may never use, you pay only when they do.
A Two-Step Medical Expense Reimbursement Plan Strategy That Works
Raise the Deductible: Start with a high-deductible health plan from a major carrier to cut premium costs significantly.
Add a Medical Expense Reimbursement Plan: Use it to reimburse employees for medical costs up to that higher deductible.
This creates a buffer for employees while putting you in control of the healthcare dollars. Rather than sending $100,000+ to an insurance company every year, you invest those dollars back into your people as needed.
Key Benefits of a Medical Expense Reimbursement Plan for Business Owners
Massive Premium Savings: Clients often see up to 40-50% in annual savings simply by adjusting the plan structure.
Tax Efficiency: Reimbursements are deductible to you and tax-free to employees.
Customizable Coverage: Tailor reimbursements to match your goals and employee needs.
Employee Satisfaction: Offer better real-world coverage with less red tape and more support.
Scalable Strategy: Works for businesses with as few as 5 employees or as many as 5000+.
Cash Flow Control: Pay only when claims are filed rather than locking funds into high, fixed premiums.
Real Control. Real Results with a Medical Expense Reimbursement Plan
Traditional plans come with demand rigid, annual commitments and offer little customization. In contrast, a Medical Expense Reimbursement Plan can be adjusted at any time. If employee needs shift or costs rise, you can respond quickly.
And implementation doesn’t mean more admin headaches. We help you work with a third-party administrator who handles claims, provides dual ID cards, and supports your team directly. It's a turnkey upgrade that doesn’t burden your staff.
Is a Medical Expense Reimbursement Plan Right for You?
If you're a business owner with:
Rising health insurance costs
A team of 5 or more
The desire to control cash flow and maximize tax efficiency
...then yes, a Medical Expense Reimbursement Plan deserves a serious look.
At Pfister Financial Services, we build strategies that support financial velocity. That means getting more from every dollar, protecting cash flow, and investing in what matters most. That’s your people and your profits.
Looking for smarter ways to lower taxes while supporting your team?
Download the free Tax Navigator Guide to discover how to classify income, leverage deductions, and design a tax strategy that supports your business and benefits plan.
