A Health Reimbursement Arrangement (HRA), also called a Health Reimbursement Account, allows you to use pretax employer payroll contributions toward non-reimbursed healthcare expenses, with the ability to carry unused funds forward.
An HRA account may reimburse any or all of the same expenses as a Section 125 Health Flexible Spending Account (FSA) and reimbursement of qualified medical expenses are tax-free. Unlike a Health FSA, where the IRS requires the annual election to be available on the first day of the plan year, only a portion of the HRA limit is added to each account once per month or pay period. You can start an HRA at any time; contact your employer or plan sponsor.
Types of HRAs:
- Bridge Plan: Pays a portion of the deductible on a high-deductible insurance product.
- Comprehensive Plan: Pays all medical expenses not covered by insurance.
- Limited Plan: Covers only a limited benefit area like, dental, vision, or prescriptions.
- Insurance Only: Pays a specified amount toward an individual or group insurance premium.
What Expenses Can Employees Pay For Using Their HRA Plan?
Depending on the kind of HRA employer offers, participants can use their HRA to pay for various medical expenses not covered by insurance. Typical expenses include:
- Doctor co-pays
- Deductibles for physician office visits, dental and vision care providers
- Over-the-counter drugs and prescriptions
- Insurance premiums
- Individually-owned policy premiums
- Long-term care insurance premiums