Health Reimbursement Arrangements (HRAs)

An HRA is an IRS-approved, employer-funded, tax-advantaged benefit plan that is used to reimburse employees’ qualified medical-related expenses. The rising cost of healthcare is a concern for most employers. With the addition of an HRA, employers can enhance and customize their benefit package while still achieving their overall corporate goal of lowering or capping benefit costs.

A few of the customizable features of an HRA include contribution amounts, eligible expenses, whether funds roll over, as well as when and how funds become available. This benefit plan is similar to a Healthcare FSA; however, it is employer-funded rather than employee-funded.

Often employers will offer a high-deductible health plan (HDHP) in order to save on premium dollars, and then they will fund an HRA to help employees reach their deductible amount. Additionally, HRAs may be designed to cover only certain medical expenses or all eligible medical expenses under IRS Section 213(d). By offering an HRA, it will boost your benefit package and meet your employees’ needs.

Additional HRA uses include Medical Expense Reimbursement Plans (MERPs) and Qualified Small Employer HRAs (QSEHRAs).

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