Paying for Health Care in Retirement
Retiree HRA
Why an HRA Makes Sense
When employees are contemplating retirement, one of their foremost concerns is the issue of medical insurance. How will they pay for it when they are no longer receiving a regular paycheck? A retiree health care benefit, sponsored by the employer in the form of an HRA, can be the answer.
What is a Retiree HRA?
A retiree health reimbursement arrangement (RHRA) is an employer-funded account designed to help retired employees pay for plan-eligible medical expenses during retirement, including individual health insurance and Medicare premiums. Once retired or having left the organization for other reasons, retirees pay for their out-of-pocket medical costs and own insurance premiums, and then have these expenses reimbursed to them through the HRA that has been funded by the employer.
In the past 15 years, there has been a significant shift away from traditional retiree medical coverage to retiree plan designs that involve the use of an HRA.
Brought to you by Benafica
For a Retiree HRA (sometimes known as an RHRA) employers set up and pay into a designated fund, which can be interest bearing. Benafica then keeps track of individual sub-account balances and administers the reimbursement of claims by working directly with the retiree. Retired employees submit reimbursable expenses to Benafica, and once approved receive the funds by direct deposit into their bank accounts. Benafica portals are available to both individuals and the employer for easy management.
Popular features for employees include:
Rollover Funds
RHRA account balances can roll over from year to year.
Tax Advantages
Tax free reimbursements to retirees for medical expenses.
Unlimited Contributions
There are no contribution limits to Retiree HRAs.
Family Benefits
Reimbursement for eligible medical expenses for spouse and qualifying dependents
Custom Plans
Unique, customizable plan designs are available for employers to offer to their retired employees
Flexibility
Employers can incorporate their RHRA into their employee compensation structures
