The reshuffling of workers and where they lived that occurred during the pandemic is in many cases, permanent. That means many employees are living in geographic locations that might appeal to their desired lifestyle, but may be at least 50 miles or more from the nearest regional medical center or specialist. Even employees who live within a major metropolitan area might need to travel long distances to receive the care of a specialist.

That’s why many employers have begun offering a medical travel benefit. In fact, a recent survey conducted by Mercer found that 44% of large employers are currently offering at least one vehicle through which employees can reimburse for medical travel. Employers with 5,000 or more employees are even more likely to offer medical travel benefits at 56%.

Reimbursing for medical travel can have a profoundly positive impact on both employees’ lives and the company overall. Here’s how.

What is Medical Travel?

Medical travel is defined as traveling at least 50 miles from the individual’s residence, one way, for the primary reason of receiving necessary medical treatment which is not available inside that 50 mile radius. There are several ways employers can help employees pay for medical travel: Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Medical Travel HRAs and aEmployee Assistance Program (EAP), also known as Medical Travel Accounts (MTAs). Since HSAs and FSAs can be used to pay for other, important medical expenses, these are not typically defined as medical travel benefits.

A medical travel benefit is an account an employer establishes that helps employees pay solely for medical travel expenses. The two types of accounts that qualify as medical travel benefits are Medical Travel HRAs and MTAs.

A Medical Travel HRA (aka a Transportation HRA) is an employer-funded plan where the employer promises to reimburse for predetermined necessary medical travel expenses that aren’t covered by health insurance. Medical Travel HRAs can be designed to cover eligible employees or their spouse and dependents. Employers choose how much they’ll contribute and at what cadence (monthly, quarterly, yearly). Medical Travel HRAs are not HSA compatible and are capped by the IRS at $1,950 per year (as of 2023), with caps on lodging at $50 a night and mileage reimbursement at 22 cents a mile.

Medical Travel Accounts (MTAs) are employer-sponsored Employee Assistance Programs that are specifically designed to pay for medical travel. Medical Travel Accounts accounts are employer-owned and employer-funded and employees will be assessed income taxes for the reimbursements they receive. Since these are after-tax excepted benefits, employers have more flexibility and control over how the program is designed.

What does it cover?

Employers can choose to allow their Medical Travel HRAs or MTAs to cover a wide range of expenses including (but not limited to):

• Gas and mileage on personal car

• Overnight lodging for participant and necessary travel companion (as long as it’s not deemed a “luxury accommodation”)

• Ambulance fees

• Parking fees

• Rental car

• Public transportation like bus, train, taxi, ferry or metro

• Airplane ticket

• Tolls

Employers can choose to reimburse only for travel that’s necessary for medical care the employee and plan participant needs, they can choose to include the travel costs of a necessary travel companion, and they can choose to cover medical travel necessary to treat the participant’s spouse and dependents. Employers can also choose the radius from the employee’s home that constitutes medical travel (i.e. 50 miles, 75 miles, or 100 miles).

Generally speaking, MTAs and Medical Travel HRAs can’t be used for the following expenses:

• Medical care while traveling

• Travel to and from work

• Auto insurance

• Vehicle registration

• Maintenance and repair costs on personal vehicle

• Traffic or parking tickets

• Personal travel expenses

How do I offer this benefit?

Medical Travel HRAs and MTAs aren’t tied to any specific health insurance plan nor are they only available to certain types of employers or employees. That means any employer that wishes to offer these accounts to its employees may do so. And any employees whose employer offers an MTA or Medical Travel HRA may participate in that benefit as long as they meet their employers’ benefit participation requirements.

To add a medical travel benefit to your current benefits package, you can reach out to your benefits broker or to Lively directly. Lively offers multiple ways to help your employees pay for medical travel including HSAs, FSAs and completely customizable MTAs.

How does an MTA work?

Once an employer decides they want to offer an MTA to their employees, they must find a vendor that will help them design and administer their plan. The employer decides on the plan design including:

• How much they’ll reimburse and at what cadence. For example, employers can choose if they’ll offer their allowance on a monthly, quarterly, or yearly basis.

• Who qualifies to participate in the MTA as long as the eligibility policies aren’t discriminatory in nature.

• The travel expenses for which they’ll reimburse. For example, they choose if they’ll only reimburse for travel that’s outside a certain radius of the employee’s home, whether or not they’ll cover all lodging or only lodging above a certain amount per night, etc.

• The process for reimbursements and the verification requirements for the travel expenses (not the medical procedure).

• Plan duration and plan-end extension options such as offering a runout period or permitting a carryover amount.

• Whose medical travel is eligible. Employers can choose whether or not they will cover travel for spouses’ and dependents’ care or solely medical travel necessary for the employees’ care. They can also choose if they will cover necessary or nonessential companion travel expenses.

Since MTAs are employer-owned, any unused portion of the travel allowance gets reabsorbed by the employer at the end of the plan term. Employers should talk to their tax and legal advisors on how to treat employee MTA reimbursements in accounting. Employers are still responsible for paying their portion of the associated Social Security and Medicare taxes on the reimbursed amounts because these reimbursements are added to employees’ gross income.

Once the plan is designed, employers offer it as part of their benefits package during open enrollment and administer it according to plan documents.

Benefits of offering an MTA

There are many benefits to employers in offering medical travel benefits to employees through an MTA. Including:

• Healthier workforce. No matter where your employees live, the best medical care they can receive for their needs might not be within a comfortable day’s drive. And the cost to receive that care might be enough of a deterrent that the employee will either receive suboptimal care closer to home or no care at all. This could lead to adverse outcomes which lead to your employee being absent more days and lower productivity. By offering employees a way to pay for medical travel you not only incentivize them to receive the care they need, you show them that you value their health.

• Lower financial stress. More of your employees are struggling with financial stress than you think. In fact, 49% of employees report feeling financial stress and spend 3-4 working hours each week dealing with related issues. By lowering the financial burden of receiving needed medical care, whether it’s for the employee, their spouse or dependents, you lower the stress they feel, enabling them to be more productive at work.

• Supports and advances the goals of Diversity, Equity, and Inclusion (DEI) initiatives. For example, it helps those living in rural areas with a scarcity of specialists or reproductive care access throughout the U.S. By offering an MTA, you help ensure your employees can receive the care they need.

• Increased loyalty and improved company culture. Employees who feel supported by their employers are more likely to stay. And high turnover rates are expensive. Not just because it can cost almost 2x an employee’s annual salary to replace them, but because high turnover rates lower company morale, which in turn decreases productivity and leads to more turnover. Supporting employees financially with an MTA shows them they’re valued.

• It’s a flexible supplemental benefit. They are also compatible with any kind of health insurance plan and can be participated in while also participating in an FSA, HSA, or HRA.

• Employers have more control over account administration. You can design your plan to fit your budget and your company values.

• Cost-effective benefit. Any unused funds are reabsorbed by the employer at the end of the plan term. Plus, since employers only pay for the reimbursements employees request, they have control over benefit administration and plan design, and can write off the reimbursements employees request, an MTA is a cost-effective way to financially support employees.

• More effective recruitment efforts. This is especially important if you want to cast a wide net in the employee pool or actively recruit remote employees that might not live close to a regional medical center.

Is it right for my company?

In order to determine if offering an MTA to your employees is the right thing for your organization, you must decide the benefits you’d like to cover, your budget and whether or not there’s another way to cover these benefits that might be more economically efficient.

1. The benefits you’d like to cover. Typically, MTAs are designed to cover all forms of transportation, necessary overnight lodging (as long it’s not a luxury accommodation). You can decide if the expenses reimbursed must all be for the employee or if a necessary travel companion can be included. You can also decide whether or not you’d like to reimburse for medical travel necessary for spouses and dependents.

2. Your budget. Given the expenses you’d like to cover, have you budgeted enough to fund an MTA for every employee. Not every employee will participate and not every participant will reimburse for the maximum allowable amount. But you should budget as if they do. Included in your budget should be the cadence at which the MTA renews. According to a recent Mercer survey, 25% of employers offer a median allowance of $5,000 per occurrence, 24% of employers offer a median allowance of $4,000 per year, and 18% of employers offer a median allowance of $10,000 per lifetime.

3. Is there another way to reimburse for these expenses? If you already offer an HSA and/or an FSA, there are other ways your employees can reimburse for medical travel expenses. However, since these types of accounts are pre tax and can be used to pay for a wide range of expenses, and in the case of an HSA, can be used as a retirement account, it might be prudent to offer an MTA and allow employees to reserve their pre tax account for other expenses.

As an employer an MTA will be right for you if your budget for your employees’ MTAs is both enough to cover your desired expenses and to be competitive in the labor market. It can also be right for you if you want to augment your current benefits package with a targeted benefit that allows employees to keep their pre tax accounts for other expenses.

How Lively can help

Lively is your partner in offering the most comprehensive benefits package for your budget. We specialize in ancillary benefit accounts like HSAs, FSAs, HRAs, LSAs, and MTAs that augment your group health and dental plans with support your employees need and value. Our accounts are well-designed and easy to use, and when employers or employees need help, our best-in-class customer support is available. To start the conversation about how we can meet you and your employees' needs, reach out today.