What is a Health Reimbursement Arrangement/Account?

Health Reimbursement Arrangements (HRAs) are the most versatile employer-designed benefit where the employer reimburses employees for out of pocket medical, dental and/or vision expenses. The employer can decide to reimburse only one expense (e.g. prescriptions or deductible expenses), or any expense that insurance does not cover (e.g. medical, dental and vision).

The employer decides who will receive reimbursement. He may choose to reimburse only employees on the group medical plan, all employees, or all employees and their dependents. This plan must be non-discriminatory so reimbursement must be the same for all classes of employees.

An HRA can be funded monthly, annually, or only when an employee presents a claim for reimbursement. The HRA can be an annual "promise to pay" an expense (such as deductible expenses) with no rollover of unused funds or it can be a funded account where unused funds rollover and accumulate every year to protect the employee and/or family from a catastrophic medical event in the future. A funded HRA typically does not allow unused funds to be portable when an employee terminates but if the employer wants the funds to go with the employee that is also allowable.

To learn more about HRA’s and what they could do for your company, please contact one of our licensed, professional agents today.