Employee Benefits with the Human Touch
Health Reimbursement Arrangement
A 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. The HRA is also known as a Group Coverage HRA (GCHRA) or an Integrated HRA.
A Flexible Benefit for Your Employees
A Group Coverage Health Reimbursement Arrangement (HRA) is a powerful, employer-funded benefit that helps employees manage their healthcare costs by reimbursing them for medical expenses not covered by their group health insurance plan. As an employer, offering a Group Coverage HRA allows you to provide a flexible, cost-effective way to support your employees’ healthcare needs while offering tax advantages for both you and your workforce. Here’s what you need to know about sponsoring a Group Coverage HRA.
What is a Group Coverage HRA?
A Group Coverage Health Reimbursement Arrangement (HRA) is an employer-funded benefit that reimburses employees for eligible healthcare expenses not covered by their primary health insurance plan. It is designed to complement your company’s group health insurance offering, helping to cover additional out-of-pocket medical costs that employees may incur.
Key Features:
- Employer-funded: The employer contributes funds to the HRA, which employees can use for qualified medical expenses.
- Tax-advantageous: Employer contributions to an HRA are tax-deductible, and reimbursements are tax-free for employees when used for eligible expenses.
- Customizable: Employers have flexibility in determining the types of expenses covered and how much is reimbursed annually.
- No Impact on Employees’ Taxable Income: Employees do not pay taxes on the money they receive through the HRA for eligible medical expenses.
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How it works for Your Employees
When you offer a Group Coverage HRA, employees can submit claims for reimbursement for out-of-pocket medical expenses that are not covered by your company’s primary health insurance plan. The HRA can cover a wide range of healthcare costs, depending on how the plan is structured.
- Employer Contributions: As the employer, you determine the annual contribution limit. These contributions are typically made on an annual basis and can be used by employees to pay for eligible medical expenses.
- Eligible Expenses: Eligible expenses include copayments, deductibles, prescription medications, dental and vision care, and other out-of-pocket costs that are not covered by the primary health insurance plan.
- Accessing Funds: Employees typically submit claims for reimbursement or use a debit card linked to their HRA, depending on how the plan is set up. The reimbursements are made tax-free as long as they are for eligible expenses.
Eligible Expenses
A Group Coverage HRA can cover a wide variety of medical expenses, depending on the structure of the plan. Some examples of eligible expenses include:
Medical Expenses:
- Deductibles, copayments, and coinsurance
- Prescription medications and certain over-the-counter drugs
- Doctor visits, hospital stays, and surgeries
- Preventive care, such as immunizations and screenings
Dental and Vision Expenses:
- Routine dental checkups, fillings, and orthodontics
- Vision care, including eye exams, glasses, and contacts
Other Qualified Healthcare Costs:
- Chiropractic services, mental health counseling, and physical therapy
- Medical supplies, such as bandages, crutches, and glucose monitors
Advantages of an HRA
Employers
- 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.
Participants
- HRA funds are tax-free to employees.
How it Works
For Employers
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.
For Participants
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.
Tailored an HRA to Meet Your Needs
Employers can customize their plans through many options, including:
Deductible
- 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.
Coinsurance
Choose whether the HRA pays at 100% or a different amount after the deductible is met.
Copayment
Choose how the HRA handles copayments.
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