What is an HRA?
A Health Reimbursement Arrangement (HRA) is an employer-funded plan that helps employees purchase individual health insurance and, in case, cover out-of-pocket medical expenses. Here’s what you need to know about how HRAs work and the benefits they offer.
Key Features of HRAs:
Personalized Benefits: Instead of choosing from a limited number of plans chosen by an employer, employees can compare many plans from different insurance carriers, coverage levels, provider networks and more to select a plan that works best for their individual needs.
Employer-Funded: Unlike other health accounts, HRAs are funded entirely by your employer. You do not need to contribute to these accounts. Note that you may have an out-of-pocket employee contribution if your premium is higher than your HRA allowance.
Reimbursement - HRA: With a reimbursement 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.
AutoPay HRA: Some HRAs use the Take Command AutoPay feature which enables carriers to pull premiums directly from the employer’s account. If a premium is higher than employee’s allowance, the difference is deducted via payroll.
Tax Advantages: Reimbursements from an HRA are typically tax-free, making your medical spending more efficient.
Eligible Expenses: Some HRAs allow for reimbursement of medical expenses including common expenses like:
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 your Take Command HRAs Works:
Plan Design: Your employer designs the HRA, deciding on allowance amounts whether to allow reimbursement of eligible medical expenses, and whether AutoPay will be offered.
Reimbursement Claims Process: You pay for medical expenses and submit claims with receipts or other documentation to the HRA plan administrator (i.e. the Take Command platform).
Reimbursement: The plan administrator reviews your claims and reports eligible reimbursement amount to employers. Employers then reimburse employee for your approved expenses up to the annual limit set by the employer.
Advantages of HRAs:
Flexibility: HRAs can be tailored to meet the specific needs of different workforces.
Personalized Plans: Employees can compare many plans to select a plan that works best for their individual needs.
Tax Benefits: Reimbursements are tax-free for you and tax-deductible for your employer.
Certain plans under QSEHRA are taxable.
Cost Control: Employers can manage healthcare costs by setting annual reimbursement amounts.
What to Keep in Mind:
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.