What Is A Health Reimbursement Arrangement For Health Insurance?

By Cathy Wilson Posted in Health Insurance News

A Health Reimbursement Account/Arrangement (HRA) are health savings accounts sanctioned by the IRS. They allow employers to set up health reimbursement accounts that reimburse employees for medical expenses not covered by their health insurance plan. An employer can provide an HRA plan that can be rolled over from year to year like a savings account. The employer decides when and how the funds are rolled from year to year and how much rolls over.

The Benefits

This is an excellent benefit for employees who spend a lot in out-of-pocket medical expenses. These accounts can be used for diagnostic testing, co-pays, prescriptions, and necessary medical equipment. This is a great benefit for employers because they can put the money they would spend on health care into a tax sheltered account. Employers also know the maximum amount of their health care expenses. For the employees, the money they receive from the HRA is not counted toward their gross income.

Any unused money in the HRA can also be rolled over from year to year. Employees are not required to be enrolled in a traditional health insurance plan to qualify. One of the major benefits for employees and employers alike is that these accounts are really tailor-made to the employees medical expenses. So the employees that only see the doctor for check-ups are not paying for the employees with serious medical conditions, which often happens with standard health plans.

The Drawbacks

The biggest disadvantage is that once an employee has used all of the money in the HRA they are not eligible for any more reimbursements until the next fiscal year. Since HRAs are not clearly defined in legislation they are subject to interpretation by the employers. They might not always be used like they’re supposed to be. Those who are self-employed are not eligible to participate in an HRA and those who make over a certain amount of money are subject to restrictions with their HRAs.

Related posts:

  1. What Does A Flexible Spending Arrangement Mean For Health Insurance?
  2. What Is A Health Savings Account For Health Insurance Coverage?
  3. What Are Archer Medical Savings Accounts For A Health Insurance Policy?
  4. Do Health Savings Accounts Really Save Money?
  5. What Is A Health Care Savings Account?

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