Health Reimbursement Account (HRA)
A Health Reimbursement Account (HRA) is a benefit plan used to help cover medical expenses such as copays, coinsurance, deductibles and services that are not covered by your standard group health plan. (The standard group health plan can be any plan, not only “high deductible plans.”) HRA coverage may vary from plan to plan and can be custom tailored to meet your specific needs. For example, you can set up an HRA that covers only very specific medical needs not covered by your group health plan, such as dental and vision.
Contributions
An HRA is funded by you, the employer, only. No employee contributions are allowed or accepted.
Usable Funds
Since you, the employer, contribute all the funds to an HRA, employees can use only the funds contributed to date, less any prior reimbursements. You can contribute monthly, quarterly or annually.
Roll Over Rules
In an HRA, you have the option of letting employees roll overall, or a portion of, their unused funds into the next coverage period.
Benefits
There is a lot of flexibility afforded employers in designing a plan to meet the needs of their employees. HRAs are more flexible for employers than HSAs in several ways.
Benefits to Employers
- Do not need to pre-fund the account
- You determine timetable for making contributions
- You determine contribution amount and amount of rollover to the next year
- You determine what happens to unused funds when employee terminates or retires
- Can use tax deductible dollars to reimburse employees for qualified medical expenses