How does an HRA work?
A health reimbursement arrangement (HRA) is integrated with your employee benefit plan. Your employer decides how much money to dedicate each year to help you pay for qualified medical expenses for you and your covered dependents not covered by any other source. Your employer also decides what health care expenses are covered by your HRA.
Some of the most common plan designs for HRAs are listed below. Check with your employer about your specific plan design.
HRA for First Dollar Deductible Coverage
This HRA covers qualified medical expenses right away. As you pay for expenses that are subject to your deductible, your HRA will cover those expenses with no need for you to pay anything out-of-pocket until your HRA is exhausted.
HRA After a Portion of Your Deductible is Met
This HRA covers qualified medical expenses after you meet a portion of your deductible. At that point, your HRA will cover future qualified medical expenses with no need for you to pay out-of-pocket until your HRA is exhausted.
HRA with Pharmacy Debit Card
This HRA covers qualified pharmacy expenses only.
What are the benefits of an HRA?
Offsetting out-of-pocket responsibility
An HRA is offered in conjunction with your health plan to help offset your out-of-pocket costs. Your health plan may require you to pay copayments and/or deductible before our plan starts paying for services. Also, once you meet your deductible, you may need to pay coinsurance, which is a percentage of services, until you meet your out-of-pocket maximum. An HRA helps offset your deductible and coinsurance responsibility by allowing you to pay for those costs with employer funds. The funds your employer contributes are not included in your salary and are not considered taxable income.
How do I access my HRA funds?
If you have a benefits debit card linked to your HRA, pay with your card and qualified medical expenses will be automatically debited from your HRA. Some HRAs offer automatic payment of these expenses. If your plan offers this service, your out-of-pocket expenses will automatically be paid from your HRA. Again, check with your employer to determine how you may pay for qualified medical expenses through the HRA. Otherwise, you will be required to pay for the medical service upfront and then submit for reimbursement.
If you do not have a benefits debit card or auto-payment services, getting reimbursed for qualified medical expenditures is fast and easy using your online Health Financial Account portal to submit your claim.
What are the differences between an HRA and an FSA?
Who sets it up
An HRA is a reimbursement arrangement set up and funded by your employer to cover qualified medical expenses. An FSA is typically funded by the employee through payroll deduction.
Unlike a health care FSA where the IRS defines the eligible services, HRA coverage is defined by your employer. For details on qualified medical expenses for your plan, check with your employer.