Health Reimbursement Account (HRA)

Unlocking the Benefits of HRA Health Reimbursement Accounts: A Comprehensive Guide

Understanding HRA Health Reimbursement Accounts

An HRA (Health Reimbursement Account) is a group benefit, funded and owned by employers, designed to assist employees with tax-free resources for qualified medical expenses. Employers allocate a fixed amount annually, and options for year-end rollovers may be offered.

Exploring Frequently Asked Questions about HRA Health Reimbursement Accounts

What Is an Employer Funded Health Reimbursement Account (HRA)?

An employer-funded HRA is a health spending account provided to employees, with predetermined yearly limits and rollover policies. Funds may cover various medical expenses, such as medical, dental, vision, and pharmacy, based on employer-established guidelines.

What Is a Health Reimbursement Account (HRA-Based) Medical Plan?

Also known as an HRA account or Health Reimbursement Arrangement, this plan isn’t health insurance but a mechanism for employers to cover employees’ qualified medical expenses. Key details include non-contributory employee funds, tax advantages, and potential rollovers.

How Does an HRA Work?

An HRA is not insurance but a means for employees to pay for diverse medical expenses. Employers decide the covered expenses, and qualified costs can be paid immediately or reimbursed. Employees do not retain funds upon leaving the company, although post-retirement access may be permitted by some employers.

What Is the Difference Between an HRA and an HSA Insurance Plan?

While both serve as financial tools for medical expenses, the crucial difference lies in ownership. Employers own and fund HRA insurance plans, with unused funds reverting to the employer if an employee leaves. Conversely, employees own tax-advantaged HSA insurance plans, portable across employers.

Advantages of HRA Plans

For Employers:

• Maintains control over plan design and fund rollover.
• Seamless integration with Flexible Spending Accounts (FSAs).
• Functions as an effective employee retention tool.
• Offers a tax-favored benefit.

For Employees:

• Facilitates asset accumulation.
• Does not mandate a High Deductible Health Plan (HDHP).
• Entirely employer-funded.
• Immediate availability of funds.

Can an HRA Be Used to Pay Health Insurance Premiums?

Yes, within the broad discretion granted by the federal government, employer-funded HRA plans can cover health insurance premiums and long-term care insurance if permitted by the employer.