A health reimbursement arrangement (HRA) is a stand-alone, employer-funded plan commonly combined with a high deductible health plan. An HRA allows employers to fund an account to pay employees’ medical expenses that are not covered by insurance such as deductibles, copays or coinsurance.
An HRA can be offered alongside a Flexible Spending Account (FSA) to help employees offset qualified medical expenses. Additionally, employers determine when HRA funds are available to employees, what expenses can be reimbursed, and how unused funds are disbursed upon employee termination. Reimbursements on qualified expenses are tax-deductible for the employer and tax-free for the employee. If elected by the employer, unused funds can be carried forward.
HRAs are designed by employers to meet the unique needs of the company and employees. Employers fund HRAs to cover or reimburse an employee’s qualified expenses not covered by the traditional health plan. There are four common HRA plan designs most employers adopt, but the inherent flexibility of an HRA allows for many options.
All medical expenses applicable to the health plan's deductible qualify for reimbursement. This plan design excludes copays or coinsurance amounts. Qualified deductible-related expenses are those incurred by the employee or the employee's family. An Explanation of Benefits (EOB) is typically required to substantiate reimbursement requests.
All out-of-pocket medical expenses not subject to a deductible are eligible for reimbursement. This includes copays, coinsurance, dental, vision, prescription, and other out-of-pocket medical expenses. These expenses may be incurred by the employee or the employee's family. An EOB is typically required to substantiate reimbursement requests.
Plans may be designed to cover dental expenses only, orthodontia expenses only, vision expenses only, prescription medical expenses only, and/or other specified expenses. A copy of a receipt or copy of a bill identifying the date of service, amount of service, and the name of the service provider are typically used to substantiate reimbursement requests.
All out-of-pocket medical expenses not covered by insurance are eligible for reimbursement. This includes deductibles, copays, coinsurance, dental, vision, prescription, and other out-of-pocket medical expenses. These expenses may be incurred by the employee or the employee's family. An EOB is typically required to substantiate reimbursement requests.
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