A Health Reimbursement Arrangement (HRA) is an account funded solely by an employer to help employees pay for health care expenses on a tax-free basis. The employer sets the parameters for the Health Reimbursement Accounts and unused dollars remain with the employer. HRAs are not portable- they do not follow the employee to new employment.
Most often but not always, HRAs are implemented in conjunction with a High Deductible Health Plans (HDHP) in an effort to control health insurance costs. Because the HDHP premiums are lower, the employer is able to deposit the savings into HRA accounts for employers to access. The annual amount deposited into these accounts is typically sufficient to cover an individual’s or family’s annual health care expenses, but less than the health insurance annual deductible. This potentially creates a gap which the employee is responsible for a portion of expenses within a plan year. This is incentive for participants to be wise consumers and offer employees choices when shopping for health care.
The amount of funding, eligible expenses and rollover amount, if any, is decided by the employer and specified in the Plan Document which is provided to all HRA participants.
HRA’s are flexible and can be customized to meet your business needs, please contact us today for a quote!