Handelman Insurance Advisors, Inc.

Health Reimbursement Arrangements (HRA)

Health Reimbursement Arrangements or Health Reimbursement Accounts (HRAs) are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to reimburse medical expenses paid by participating employees, thus yielding "tax advantages to offset health care costs".

How HRAs Work

• With an HRA, employers fund individual reimbursement accounts for their employees and define what those funds can be used for – i.e., specified out-of-pocket expenses such as deductibles and co-pays.
  

• HRAs reimburse only those items (copays, coinsurance, deductibles and services) agreed to by the employer which are not covered by the company's selected standard insurance plan (any health insurance plan, not only High-Deductible plans.
  

• Qualified claims must be described in the HRA plan document at inception, i.e., before reimbursing employees for those medical expenses. Arrangements (medical services, dental services, co-pays, coinsurance, deductibles, participation) may vary from plan to plan, and an employer may have multiple plans in place, allowing much flexibility.
  

• The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee.
  

• Employees are reimbursed tax-free for qualified medical expenses up to a maximum dollar amount for a coverage period.
  

• An HRA may be offered with other health plans, including FSAs.
  

• The employer is not required to prepay into a fund for reimbursements, instead, the employer reimburses employee claims as they occur.
  

Benefits for the employees include

• Contributions made by the employer can be excluded from the employee's gross income.
  

• Reimbursements may be tax free if the employee pays for qualified medical expenses.
  

• Any unused amounts in the HRA can be carried forward for reimbursements in later years.
  

Please feel free to contact us for information or to set up an HRA...