How HRAs Work?

Once the HRA-compatible high-deductible health plan is established, the employer would cover all or part of the deductible by establishing and contributing to a tax-advantaged HRA for its employees. Once the deductible is met, a percentage of the network services are covered by the health plan if the insured seeks care within the designated network of doctors and hospitals. Some eligible medical expenses that are reimbursable to the employee include: doctor office visits, prescription drugs, routine physical exams, vision expenses, and dental expenses.

Employees are reimbursed with tax-free dollars from their HRA after they submit an eligible request for reimbursement, along with an Explanation of Benefits (EOB) offered by the health care provider. We will reimburse employees directly with checks being issued twice a month. Employees have a grace period after the plan year ends (determined by the employer) to submit claims for expenses incurred during this plan year.

Here is a quick summary of the plan details of an HRA:

HRAs do not need to be pre-funded and are available to all business sizes.
Only the employer can contribute to the HRA.
Employees have access to the account and may be allowed to rollover any unspent funds for service in upcoming years.
Employees receive reimbursements tax-free without hassle.
HRAs offer complete flexibility with employee retirement or termination