What are the basic features of a Health Reimbursement Arrangement (HRA) and how does it save employees money?
The HRA is an employer-funded benefit that reimburses various healthcare expenses incurred by an employee, their spouse (using Federal definition) and their qualifying dependents. HRA designs vary by employer, but all HRAs are funded strictly with employer dollars and employees do not pay income tax on the amount of the benefit.
See your Summary Plan Description for a detailed explanation of your HRA benefit.
How does an employee get reimbursed by the HRA?
Employees must submit a claim to be reimbursed by the HRA. Claims may be submitted online or by using a Reimbursement Request Form, which is available in the Resources section of this website. Claims must be accompanied by the Explanation of Benefits from the insurance carrier, or other itemized documentation for the expenses being claimed.
Some HRAs also include a debit card which can be used to pay merchants directly from the HRA for qualified expenses.
How does an employee know what expenses are eligible for reimbursement by the HRA?
Employees will receive a welcome notice by mail or email explaining the HRA benefit in detail, including what expenses are eligible for reimbursement by their employer’s HRA.
Employees can also access this information in their Summary Plan Description.
What if an employee is covered by an FSA or HSA in addition to the HRA?
HRAs are sometimes available in conjunction with other tax-favored accounts, such as an FSA or HSA. If this is the case, employees should consult their welcome announcement or Summary Plan Description for an explanation of how the two benefits are coordinated.