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Understanding Your Health Reimbursement Arrangement (HRA)
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Written by Support
Updated over a week ago

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:

  1. Employer-Funded: Unlike other health accounts, HRAs are funded entirely by your employer. You do not need to contribute to these accounts.

  2. 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.

  3. Tax Advantages: Reimbursements from an HRA are typically tax-free, making your medical spending more efficient.

  4. Eligible Expenses: Common expenses that HRAs cover include:

    1. Deductibles

    2. Co-payments

    3. Prescription medications

    4. Other out-of-pocket medical expenses found on the FSA store: FSAstore.com Eligibility List (link)

Types of HRAs:

  1. Individual Coverage HRA (ICHRA): Reimburses for individual health insurance premiums and qualified health expenses.

  2. 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:

  1. Plan Design: Your employer designs the HRA, deciding on eligible expenses, maximum reimbursement amounts, and whether unused funds will roll over each year.

  2. Claims Process: You pay for medical expenses and submit claims with receipts or other documentation to the HRA plan administrator.

  3. 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.

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