HRA

Sample Reports

What is an HRA?
An HRA or Health Reimbursement Accounts are IRS sanctioned programs that allow an employer to reimburse medical expenses paid by participating employees, thus yielding tax advantages to offset health care costs.

Who Contributes to an HRA?
HRA’s are funded solely by the employer. The employee cannot contribute to this plan through a voluntary salary reduction agreement (i.e., a cafeteria plan). Your employer decides how much he/she wishes to contribute to the HRA; this is not determined by an employee’s income.  

What can I get reimbursed?
Reimbursements vary by plan; however, most HRA plans reimburse for specific out-of pocket expenses such as co-pay’s, coinsurance, deductible and services. HRA’s will reimburse only those items that your employer has agreed to cover. Reimbursements are paid by the employer to the employee once a month as claims are submitted. Qualified claims are listed and described in the HRA plan documents.

Who can participate in an HRA?

  1. Current and former employees.
  2. Spouses and dependents of those employees.
  3. Any person the employee could have claimed as a dependent on their tax return except that:
    1. The person filed a joint return.
    2. The person had a gross income of $3,400 or more.
    3. The employee, or his/ her spouse if filing jointly, could be claimed as a dependent on someone else’ tax return.
  4. Spouses and dependents of deceased employees.

What are the advantages of an HRA for employers?

  1. Reimbursements of qualified claims are tax- deductible for the employer
  2.  Employers know their maximum expense related to their health care benefit.

What are the advantages of an HRA for employees?

  1. Contributions that employers make can be excluded from employee’s gross income.
  2. Reimbursements may be tax free if the employee pays for qualified medical expenses.
  3. HRA’s may be offered in conjunction with other employer- provided health benefits including FSA’s (Flexible Spending Accounts).
  4. Employees do not have to be covered under any other health care plan to participate in an HRA.
  5. Employees can be reimbursed for a health care plan that meets their or their families’ specific needs, as opposed to a standard company plan.

What are the limitations of an HRA?

  1. Self- employed persons are ineligible.
  2. “Highly compensated” participants may be subject to “certain limitations.” 

HRA’s must follow a “variety of statutory rules and provisions” including the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage requirements, the Employee Retirement Income Security Act (ERISA), and the Health Insurance Portability and Accountability Act (HIPAA).

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