Health Reimbursement Arrangement

What is it? How does it work?

Health Reimbursement Arrangements are an innovative approach to employee benefits. This type of plan is an arrangement set up and sponsored by the employer to offer a defined benefit to the employees. The benefit is then used by employees to pay for qualified medical expenses.

HRA plans have endless design options and can be shaped to best fit your organizations financial goals and employee benefit needs. Many employers are offering a high deductible plan and pairing it with an HRA that will reimburse employees for some or all of the deductible expense. The level of benefit and the degree of financial liability is determined during the plan set-up process.

Eligible Expenses

The employer determines what will and will not be reimbursable under the plan. Eligible expenses can be anything under the scope of IRC Sec 213d. Many employers decide to limit the eligible expenses to certain types of expenses- for example deductibles, co-pays and co-insurance. Other employers will offer a wider range of eligible expenses.