Health Reimbursement Arrangements
What are HRAs?
HRAs are Health Reimbursement
Arrangements and are authorized under Section 105 of the IRS. They are
employer funded reimbursement accounts and are not taxed to employees.
How do HRAs Benefit Employers?
HRAs provide better management
of benefit plan costs by allowing for various plan design options. They
provide tax deductions for reimbursements. HRAs assist in employee
retention by enhancing benefit packages and soften the impact of higher
deductibles to employees.
What are the Benefits to Employees?
HRAs are employer funded and provide
tax free reimbursements for qualified medical expenses. HRAs allow for
carry over of unused money.
How do HRAs work?
The
employer implements a high deductible medical plan which can lower
premiums. The savings from medical plan premiums can be used to fund
the HRA. HRAs have numerous plan design options for employers.
Comparing
HSAs, HRAs, and FSAs
|
Question
|
HSA
|
HRA
|
FSA
|
|
Do the funds belong to the employee?
|
YES
|
NO
|
YES
|
|
Can the money be invested and the employees earn interest?
|
YES
|
NO
|
NO
|
|
Can the employees use the funds for things other than medical expenses?
|
YES
|
NO
|
NO
|
|
Can the employee take the money with them if they switch employers?
|
YES
|
NO
|
NO
|
|
Do the funds rollover year-to-year?
|
YES
|
Generally, NO
|
NO
|
|
Who can contribute to the account?
|
Employers and/or Individuals
|
Employers
|
Employee
|
HRAs are employer owned. FSAs have the "use it or lose it clause".
Money has to be spent by the end of the calendar year or it is forfeited to
your employer.
