Overview on Health Reimbursement Arrangements

HRA Overview

Your employer offers a Health Reimbursement Arrangement (HRA), and you need to know what that means for you.

An HRA is an employer-sponsored benefit plan funded solely by the employer that allows employees to receive reimbursement for qualified expenses.

Plan Specifications

HRAs are owned and funded by the employer. Therefore, the employer works with a benefits administrator to set up plan design, which may vary from company to company. Employers must provide a Summary Plan Document (SPD) that outlines the plan details. There is NO healthcare plan requirement for an HRA, and if you leave the employer for any reason, the funds in your HRA are no longer available to you.

Contribution Limits

Each employer decides how much to contribute to their employees’ HRAs; therefore, funding may vary. It’s important to remember that funding cannot be deducted from the employee’s paycheck. Each employee should receive the same benefit amount, though the plan may allow a difference for single workers versus those with families.

Need to Know!

  • Qualified expenses vary by employer and can include prescriptions, dental and vision expenses, copays, deductibles, and more. Refer to your Summary Plan Description (SPD).
  • Unused funds in an HRA may rollover each year, depending on plan design
  • Employers enjoy payroll tax benefits from contributions, while employees pay no taxes when the HRA is used for eligible expenses
  • An HRA is considered a notional account, in that the employee must incur a qualified medical expense before any funds are reimbursed

Additional Information about Health Reimbursement Arrangements

For more information about HRAs, check out these blogs from the Captain:

  • HRA Overview: Contributions, Qualified Expenses, Portability and More – Health Reimbursement Arrangements (HRAs) are employer-sponsored benefit plans that allow employees to withdraw tax-free money to pay for qualified medical expenses. The first thing to know and remember about HRAs is that each plan is unique to the employer. They are funded only by the employer. Employees do not contribute one cent.
  • Having an HRA and HSA: The Best of Both Worlds – The answer is yes, under specific circumstances. Before we get to that, it’s important to take a quick look at these two accounts.
  • FSA vs HRA vs HSA: A Comparison with Chart – For employer-sponsored healthcare benefit accounts, there are Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs). On first glance, the three have a lot in common; however, there are some significant differences between them.