An HRA is an employer funded personal benefit account that reimburses employees for certain insurance premiums and out of pocket medical expenses.
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A Health Reimbursement Arrangement (HRA) is an employer funded health benefit account that reimburses employees for out-of-pocket medical expenses, and in some cases for certain insurance premiums. All HRA dollars are tax deductible to the employer, and in most cases income tax free to the employee.
3. EBHRA. Excepted Benefit HRA. Must be offered in conjunction with a traditional group health insurance plan, although employees are not required to be enrolled in the group health insurance to participate in the EBHRA. Employers in 2023 can contribute a maximum of $1,950 per year. An EBHRA can reimburse for dental and vision coverage and short term coverage. It can also reimburse for other medical expenses.
4. Group Coverage HRA. Also called an Integrated HRA. Must be offered in conjunction with a traditional group health insurance plan – usually a high-deductible plan. It reimburses employees tax-free to help cover their deductibles, co-insurance amounts, and other approved medical expenses. Can roll over year to year.
5. Dental/Vision HRA. Designed exclusively for employers who want to reimburse for Dental and Vision expenses. Excellent option to help families plan for expensive dental care above what insurance pays for. Can roll over year to year.
6. The Retiree HRA. Designed to help retired employees pay for plan-eligible medical expenses and insurance premiums during retirmenet. Retirement expenses can include COBRA premiums, health insurance premiums, and Medicare premiums. A Retiree HRA is a great option to replace Group Medicare coverage, allowing better customized plan flexibility for retirees and more cost savings for all parties involved. Key longevity tool for employee retention.
There are many advantages for employers to offer HRAs.
|Cost Control||Employers chose each year how much to contribute to employee’s HRA accounts.|
|Tax-Advantaged||Employer contributions to the plan are 100% tax deductible.|
|Flexibility||The employer Is the plan sponsor and the sole contributor, and the employer Is allowed to design a plan that fits their company.|
|Low Risk||Each reimbursement claim is filed and adjudicated, reducing the potential for benefit fraud.|
|Recruiting Talent||An Employee Benefit package that includes an HRA can help an employer attract and retain talent.|
|Tax-free Reimbursement||When an employee files a claim for a qualified medical expense, the reimbursement is tax free.|
|Does not Affect Income||Employer contributions do not count toward the employee’s gross income.|
|Personal Healthcare Freedom||Individuals have greater choice in their health care services.|
|Lower Healthcare Costs||Costs are lower from using tax free dollars.|