As an employer, you want to offer your employees the best possible benefits package. A Health Reimbursement Account (HRA) can significantly add to your benefits offerings. HRAs are pre-tax accounts that reimburse employees for qualifying medical expenses.
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There are many advantages of HRAs for both employers and employees. Some of the most notable advantages include:
- Savings – Employer contributions are tax-deductible, lowering their tax obligations
- Alignment – Employers are able to design the HRA to align with their specific health care goals and encourage the desired behaviors needed to achieve overall employee well-being.
- Security – Whether employees are looking to migrate to a high deductible or just manage costs, an HRA helps employers and employees manage risk and feel secure in their benefits plan.
- Employee Health & Wellness – An HRA can be used as a tool to encourage employee engagement in health care purchases or even as a retention tool.
- Customizable – Employers can design simple plans that offer complete control, including funding and eligibility requirements.
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How HRAs Work
HRAs are “employer-funded,” which means that employers contribute a set amount of money to each employee’s HRA on a monthly or yearly basis. The amount of the employer contribution can vary depending on factors like the size of the company and the location.
HRA Eligible Expenses
An HRA can reimburse employees for a wide range of qualified medical expenses, including doctor’s visits, hospital stays, prescription drugs, and more. In some cases, HRAs can also be used to reimburse employees for non-medical expenses like dental care and vision care. This list provides some guidance on the kinds of OTC items that are eligible.
The Bottom Line
HRAs are becoming increasingly popular as a way to offset the rising cost of healthcare. Thanks to their many benefits, it’s easy to see why. If you’re looking for a way to enhance your benefits offering without breaking the bank, then an HRA might be right for you!
Blogs: Read some of our Health Reimbursement blogs like:
- I have an HRA. So, what is an HRA?
- Which solution(s) should I choose? Comparing FSAs, HSAs and HRAs
- HRA’s You Didn’t Know About
- Understanding HRA Eligible Expenses
- Why You Need to Enroll in One (Or More!) Of These Pre-tax Health Accounts
- First-time HRA Account? How to avoid over-utilization and misuse
- Top HRA Plan Challenges – What to know?
- Best practices to keep your HRA plan design simple (but impactful)
FAQs: Visit the Frequently Asked Questions page for answers to questions like:
- Are all over-the-counter (OTC) items eligible for reimbursement from my HRA?
- What happens to the previous plan year funds that I do not use during the extended grace period time frame?
- Where should I submit my claim first for medical expenses: to my insurance or my HRA?
- What happens to any amount left in my HRA that I do not use by the end of the plan year?
…and other common questions related to HRAs.