What is a Health Reimbursement Arrangement?
HRAs have been referred to by many names over the last few years such as personal savings accounts, personal care accounts, defined contribution plans, or consumer-driven health care plans.
The confusion ended in 2002, when the IRS finally issued guidelines in Notice 2002-45 and Revenue Ruling 2002-41 for employer-provided medical reimbursement accounts and called it the Health Reimbursement Arrangement, or HRA.
We provide employers with everything they need to successfully establish a HRA plan. You’ll receive a complete Plan Document required by the IRS, a Summary Plan Description for distribution to all eligible employees required by ERISA and the Department of Labor, Election and Claim Forms, Resolution to Adopt, and complete Administrative information.
Why Employers Shop For HSA Plans and Buy HRA Plans?
A recent press release entitled "Why Employers Shop For HSA Plans and Buy HRA Plans" discusses the difference between HSAs and HRA plans and why the number of HRA participants in the U.S. have outpaced HSA enrollments.
How Employers Utilize a Health Reimbursement Arrangement (HRA)
Expenses not reimbursed by health insurance are one way employer groups are utilizing HRAs. With an HRA, the employer funds an account from which the employee is reimbursed for qualified medical expenses, such as co-pays, deductibles, vision care, prescriptions, long-term care, medical insurance, chiropractic care, and most dental expenses. Over-the-counter drugs that are medically necessary may also be reimbursed through an HRA. Reimbursements from the HRA are not taxed to the employee, and are deductible by the employer.
The most common use of an HRA is in combination with a High Deductible Health Coverage (HDHC) Plan. HRAs can enhance a company's benefit package while helping to contain costs and boost employee morale. For example, you can combine your HRA with a higher-deductible health insurance plan. The employer benefits from reduced insurance costs, but the effect to the employee is cushioned with an HRA.
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