What is an HRA?
A Health Reimbursement Arrangement (HRA) is an employer-funded plan that helps employees cover out-of-pocket medical expenses and health insurance premiums. Here’s what you need to know about how HRAs work and the benefits they offer.
Key Features of HRAs:
Employer-Funded: Unlike other health accounts, HRAs are funded entirely by your employer. You do not need to contribute to these accounts.
Reimbursement Basis: With an HRA, you pay for eligible healthcare expenses out-of-pocket such as medical insurance premiums, and then submit claims to get reimbursed from your HRA.
Tax Advantages: Reimbursements from an HRA are typically tax-free, making your medical spending more efficient.
Eligible Expenses: Common expenses that HRAs cover include:
Deductibles
Co-payments
Prescription medications
Other out-of-pocket medical expenses found on the FSA store: FSAstore.com Eligibility List (link)
Types of HRAs:
Individual Coverage HRA (ICHRA): Reimburses for individual health insurance premiums and qualified health expenses.
Qualified Small Employer HRA (QSEHRA): Available to small employers (fewer than 50 employees) to cover medical expenses and individual health insurance premiums.
How HRAs Work:
Plan Design: Your employer designs the HRA, deciding on eligible expenses, maximum reimbursement amounts, and whether unused funds will roll over each year.
Claims Process: You pay for medical expenses and submit claims with receipts or other documentation to the HRA plan administrator.
Reimbursement: The plan administrator reviews your claims and reimburses you for approved expenses up to the annual limit set by your employer.
Advantages of HRAs:
Cost Control: Employers manage healthcare costs by setting annual reimbursement limits.
Flexibility: HRAs can be tailored to meet the specific needs of different workforces.
Tax Benefits: Reimbursements are tax-free for you and tax-deductible for your employer.
Certain plans under QSEHRA are taxable.
Considerations for Employees:
Documentation: Keep and submit all receipts and documentation for your medical expenses to ensure reimbursement.
Plan Rules: Understand the specific rules of your HRA, including what expenses are eligible and the process for submitting claims.
Conclusion
HRAs offer a valuable benefit by helping you manage your healthcare costs. By understanding how your HRA works, you can make the most of this employer-provided resource to cover your medical expenses more effectively.
If you have any questions about your HRA, please contact us via phone, email, or chat.