MERP (Medical, [Dental and Drug] Expense Reimbursement Plan)

A plan which allows a corporation or LLC that elects to be taxed as a C-Corporation to deduct the cost of medical, dental, prescriptions, and non-prescription drug expenses not covered by health insurance. This allowable deduction is limited without the employee having to include the benefit in his or her income. Otherwise, the employee would have to pay for these benefits with after-tax dollars and could only deduct them personally if they exceeded 7.5% of adjusted gross income of the employee.