Health Reimbursement Arrangements (HRA)
Employer-provided medical reimbursement accounts, also known as Health Reimbursement Arrangements or HRAs, have typically benefited only large corporations due to complicated IRS-issued guidelines. Now, small to medium sized businesses can offer an HRA to their employees and significantly lower health care costs for both the employer and the employees.
The most common use of an HRA Plan is in combination with a High Deductible Heath Coverage Plan. The employer can reduce their overall insurance cost while the employee receives tax-free reimbursements from an employer funded HRA account.The employer funds the account from which the employee is reimbursed for qualified medical expenses not covered under their medical plan, such as deductibles, co-pays, prescriptions, etc. Reimbursements are not taxed to the employee and are deductible by the employer.
With an HRA plan in place, the overall employer cost of providing health care coverage can be significantly reduced.