Health
Reimbursement Accounts
A Health
Reimbursement Arrangement (HRA) is
a federally approved, tax-favored
program an employer can set up for
employees. HRAs are accounts
funded solely by the employer to
reimburse medical expenses of the
employee.
Any size
company can implement an HRA and
save. The amount of savings
depends on total company payroll
and how much employees contribute
toward their benefits.
How
an HRA Plan Works
-
A high-deductible health insurance plan is coupled with an HRA
set up by the employer.
-
Using the HRA, the employer reimburses a portion of each
employee's medical expenses -
usually by paying for part of
the deductible.
-
The premium savings realized with the high-deductible plan are
often more than enough to
completely fund the HRA
reimbursements.
-
HRA reimbursements are 100% tax deductible.
-
HRAs are available to any employer, regardless of the number of
employees.
-
HRAs do not require pre-funding.
The employer maintains complete
control over the HRA design.
-
The employer chooses the maximum annual reimbursement amount for
each employee.
-
The employer decides who pays deductible expenses first - the
employee or the HRA.
-
The employer can retain unused amounts at the end of the year or
elect to roll them over and make
them available to employees in
the following year.
-
The employer can retain unused funds should an employee leave the
company.
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