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Health Reimbursement Arrangement
A Traditional Health Reimbursement Arrangement (HRA) allows Employers to provide funds for employees to pay qualified medical expenses such as deductibles and copayments, along with dental, vision and drug expenses.
Employers who offer a Group Health Plan may offer an HRA. The HRA is most commonly used by employers with a higher deductible Health Plan who would like to reduce the total costs to employees.
Employees must enroll in the Group Health Plan to be eligible for the HRA. Typically, employees will be automatically enrolled in the HRA when they enroll in the Group Health Plan.
Who Can Contribute
Only the Employer can contribute to an HRA. A Medical Expense Reimbursement Plan (MERP) is a similar type of HRA that allows employees to contribute.
Advantages of an HRA
- An HRA is an Employer-funded account that helps ease the burden of higher employee healthcare costs.
- The Employer decides how much, if any, employees may roll over each year.
- The Employer may vary the HRA contributions based on level of insurance coverage.
- HRA funds are tax-free to employees.
Versus Medical Expense Reimbursement Plan
An HRA is similar to a Medical Expense Reimbursement Plan (MERP). Below are the key differences.
Unused benefits can be carried over to future Plan Years
Employees can contribute
How it Works
The Employer hosts Open Enrollment with employees and enrolls Group Health Plan enrollees in the HRA.
HRA funds may be available to employees on the first day of the Plan Year, depending on how the Plan is structured.
EMPOWER administers the Plan and issues reimbursements to employees after claims are filed. HRA reimbursements are made from an Employer-owned account.
Employees are automatically enrolled in the HRA when they enroll in the Group Health Plan.
Participants use their insurance or pay out of pocket for eligible expenses.
Participants file claims to EMPOWER with the insurer’s benefits summary sheet or explanation of benefits. EMPOWER reimburses claims conveniently from the Employer’s bank account.
EMPOWER Can Tailor an HRA to Meet Your Needs
Employers can customize their plans through many options, including:
- Choose the deductible amount (amount the participant pays before the HRA pays) for single and family coverage.
- Choose whether the HRA pays out to an individual who has met the
single deductible prior to the family reaching their deductible.
Choose whether the HRA pays at 100% or a different amount after the deductible is met.
Choose how the HRA handles copayments.
Want the Latest Contribution Limits and Guidelines?
EMPOWER’s Benefits Solutions Guide takes the guesswork out of benefits by providing a comprehensive synopsis of each plan type, as well as comparisons and sample scenarios