Internal Revenue Code (IRC) Section 105(h) allows employers to contribute tax-free funds to Health Reimbursement Accounts (HRAs) so employees can pay for certain medical expenses that are not covered by any other source. HRAs can be designed by an employer to fit a variety of needs and program designs. To understand how your HRA is set up, you will need to review your plan documents or other plan information provided by your employer.
Here are some HRA Basics:
- HRAs are funded entirely through employer contributions. Your employer will indicate what contributions will be made and at what frequency.
- Your employer will determine the eligibility requirements for receiving HRA contributions. Generally, you must be enrolled in a specific health plan through the employer to receive the funds.
- Your employer may limit the expense types that can be reimbursed through the HRA. Potential eligible medical expenses are defined by IRC Section 213(d) and may include: co-payments, co-insurance, deductible, dental, vision, chiropractic and more. Please see your plan documents for specifics on eligible expenses for your plan.
- Your employer will determine when claims must be submitted and how long contributed funds will remain available. Some plans work like an FSA and the HRA funds must be spent by the end of the plan year. Other plans will roll over from year to year.