HRA - Health Reimbursement Arrangement
How an HRA Works
Your employer puts money into your HRA and you choose how your healthcare dollars are spent. Because the money contributed by your employer doesn’t count as income, there are no tax implications. It’s kind of like getting a raise. You can use the money in the HRA throughout the year for qualified medical expenses. Depending on your plan design, any leftover dollars may roll over from year-to-year (as long as you continue to be a member of the plan) or they may be forfeited. Check with your Human Resources department or Plan Administrator for more information about your plan design.
Health Reimbursement Arrangements (HRAs) can be complex, confusing and overwhelming. The team at B3PA is dedicated to making your HRA work for both employer and employee. To summarize, the HRA is an employer-sponsored plan that can be used to reimburse a portion of employees’ out-of-pocket medical expenses. The employer specifies a designated dollar amount to credit to the account monthly or annually. The employee decides which out-of-pocket qualifying medical expenses they would like to submit for reimbursement. At the end of the plan year, any unused funding will be rolled over to the next plan year – should the employer continue to offer the program.
- Each new HRA client will have a one-on-one consultation with a knowledgeable B3PA representative to ensure the proposed HRA is as simple, efficient and valuable to the participants as possible
- A variety of HRA designs and features are available; B3PA will fully utilize the capabilities of its systems to accommodate as many options as possible
- The Qualified Small Employer Heath Reimbursement Arrangement (QSEHRA), which allows for the reimbursement of health insurance premiums along with medical expenses is a B3PA option for employers with less than 50 employees
B3PA will help its HRA employers navigate through the ever-changing regulations surrounding benefits such as: Affordable Care Act, Tax Cuts and Jobs Act, etc. We are dedicated to only operating compliant HRA plan designs
The benefit card will be an option for certain HRA designs. For some designs, however, the card may become more of a burden than an advantage.
Maximize the Value of Your Reimbursement Account – Your Health Care Flexible Spending Account (FSA) and Health Reimbursement Account (HRA) dollars can be used for a variety of out-of-pocket health care expenses that qualify as federal income tax deductions under Section 213(d) of the Internal Revenue Code (“IRC”).
Health Care FSA dollars can be used to reimburse you for medical and dental expenses incurred by you, your spouse or eligible dependents (children, siblings, parents, and other dependents which are defined in your Plan Documents).
HRA dollars can be used to pay for eligible medical expenses incurred by employees and their dependents enrolled in the HRA.
IMPORTANT: The IRS defines which medical expenses are eligible under a tax-deferred account. Not all expenses are eligible under all plans. An employer may limit which expenses are allowable under their Health Care FSA or HRA plan. If you are unsure of what your Health Care FSA and/or HRA dollars may be used for, please contact your Plan Administrator.
HRA Questions & Answers
Who can add money to an employee’s HRA?
The employer puts money into an HRA and the employee chooses how those healthcare dollars are spent.
How does an employee know the amount contributed to their HRA each plan year?
At the beginning of each plan year, the employer will notify the employee of the dollar amount contributed to the HRA for that plan year.
Do employees need to enroll each plan period?
Yes. During the open enrollment period, every eligible employee must enroll. The employer will instruct the necessary steps to complete the enrollment.
Can employees be reimbursed for their dependents’ medical expenses?
As long as the dependent meets the definition of a dependent, as defined by the IRS, entirely and is included in the employer’s plan, the answer is yes.
HRA Dollars and the Prepaid Benefits Card can be used to pay for expenses like:
- Routine Health Care. Including x-rays, lab work, and office visits.
- Hospital Expenses. Including surgery and room and board.
- Medications. Including prescriptions. Over-the-counter (OTC) medication may also qualify when prescribed by a physician.
- Dental Care. Including crowns, fillings, and routine cleanings.
- Vision Care. Including glasses, contacts, contact lens solutions, and routine eye exams.
- Coinsurance & Co-pays. Covering the portions paid by the employee.
What is the main difference between HRA and HSA?
- HSAs, however, are triple tax-advantaged. … So, not only do your contributions go in tax-free, they also grow tax-free. Your HSA can earn interest while an HRA can’t. And as long as you use your HSA money for qualified medical expenses, then you don’t get hit with any taxes or penalties when you withdraw funds.