Health Reimbursement Arrangements (HRAs)

An HRA is a customizable benefit plan that allows you to choose the expenses you want to reimburse based on the needs of your unique employee population. Also, you get to set the contribution amounts and the frequency of the contributions to employees’ accounts, so you have a predictable budget. Talk to your Associated Benefits Connection sales team member and/or benefits and tax advisors to see if offering an HRA could be a good addition to your benefits package.

Generally, yes. You will want to discuss your specific circumstances with your tax advisor to determine whether your company will benefit from these tax savings.

Generally, yes. Many employers choose to do this to allow their employees to benefit from the advantages of both accounts – building savings in the HSA while receiving protection from large claims with the HRA. However, it is very important to structure the plans correctly to make sure that your employees will remain eligible to contribute to their HSAs. Discuss your desired plan designs with your Associated Benefits Connection sales team member and/or benefits and tax advisors to make sure that your plans will be compliant.

Yes. You will want to help your employees understand how the two plans work together, for example, which plan will pay first. Your Associated Benefits Connection team and/or benefits advisor may be able to help with employee education needs.

While you don’t have to, many employers choose to do this because it makes it easier for the employer to manage their plans and employees to manage their accounts. Plus, many administrators offer package pricing that can help you save money on the benefit plans you offer. Talk to your Associated Benefits Connection sales team member about the pricing we can offer.

QSEHRAs are only available to employers with fewer than 50 full-time employees AND do not offer a group health plan. Talk to your Associated Benefits Connection sales team member and/or benefits advisor if you think a QSEHRA may be right for your company.

A health reimbursement arrangement, or HRA, is an employer-funded, IRS-approved health benefit account. These accounts help employees cover eligible out-of-pocket healthcare costs on a tax-free basis.

An HRA is an employer-sponsored health benefit account employers may offer to reimburse employees for eligible healthcare expenses. The benefit amounts and eligible expenses vary from HRA plan to HRA plan, and generally, the money available must be spent during the year or will be forfeited. Also, most HRAs are only available through the employer offering the plan, which means that if an employee leaves the employer offering the plan, the money may no longer be available after a certain point.

An HSA, or health savings account, is an individual health benefit that must be paired with an HSA-qualified health plan (also known as a high deductible health plan, or HDHP). The account may be funded by employees, employers or both. There is no use-it-or lose it rule with HSAs, which allows accountholders to save year over year, if they wish. Also, HSAs and the money saved in the account are owned by the accountholder, even if the accountholder changes jobs, insurance companies, etc.

An HRA is funded solely by the employer, who determines the annual contribution amount. Employees can then use the funds tax-free to pay for eligible healthcare expenses, as defined by their plan documents. The employer will reimburse the employee for these expenses, either by providing direct payment or reimbursing the employee after they’ve paid for the expense themselves. Depending on the plan, the employee may have the option to pay for expenses at the time of service or be reimbursed.

If an employer offers both options, employees will need to decide between an HSA and an HRA based on individual needs and circumstances. HSAs offer more flexibility in terms of contributions and rollover options, as well as tax advantages. HRAs are entirely funded by the employer and may be better suited for employees who don’t meet the requirements for contributing to an HSA or who aren’t interested in contributing their own funds to a healthcare savings account. Employees should consider their healthcare needs, financial situation and available options when deciding between an HSA and an HRA.

HRAs are funded by employers, not participants.

Eligible expenses for an HRA plan vary from plan to plan. Consult your plan documents to determine which expenses may be reimbursed by your plan.

You may request reimbursement of HRA-qualified expenses as they happen, whether you’ve already paid the expenses or not.

The employer sponsoring the plan decides how much money goes into an employee’s HRA.