The employee benefits landscape is confusing, to say the least. When I first started my career with Medcom Benefit Solutions, I didn't have a clue about HRAs, HSAs, FSAs, or any of the extra benefits employers offer. Honestly, money terms, investment plans, insurance details really make me nervous. I get intimidated by what I don't know and afraid to try to learn more. However, at Medcom I'm encouraged to learn more so I could help others better understand the language and the perks of these additional employee benefits. It has definitely been a learning process, but it hasn't been as difficult as expected.

What is an HRA?

A Health Reimbursement Arrangement is a type of employer-sponsored benefit where employees are reimbursed by their employers for medical expenses they face during their enrollment term. This arrangement is not a health insurance plan but an added benefit employers may offer as a supplement to your insurance plan, or instead of employer-sponsored health insurance. The employer decides an amount for the plan and will reimburse employees for medical expenses up to that amount each year. 

Types of HRAs

Health Reimbursement Arrangements vary by employer and their individual regulations are based on the account type. There are four specific HRA types:

1. Standard HRA
2. Individual Coverage HRA (ICHRA)
3. Excepted Benefit HRA
4. Qualified Small Employer HRA (QSEHRA)

Data Path offers a great article about the differences of each type. We encourage you to check it out HERE if you want to learn more.

What are the eligible expenses?

Eligible expenses under an HRA also vary by employer and account type. Some of the most common reimbursed expenses are:

• Deductibles
• Copayments
• Premiums (ICHRA & QSEHRA)
• Medical services and treatments
• OTC medical supplies

What are the perks of an HRA?

We all know healthcare is expensive. Outside of our premium costs, we still have to come up with the funds to pay copays for prescriptions, supply our households with cold and allergy medications, not to mention the costs associated with accidents, such as ambulance transportation, crutches, etc. All of these things are eligible for reimbursement under an HRA. Also, certain types of HRAs (see above) allow employees who are not offered health insurance by their employer, the ability to go online and purchase an individual health insurance plan from the ACA Marketplace. 

HRAs are also considered tax-advantaged plans. What does this mean? What is mean is that you do not have to pay taxes on the money you are reimbursed. Since you spent the money on qualified medical expenses, HRA funds are not considered income and therefore not subject to taxes! The only possible draw-back to an HRA is that it is not portable. If you leave your job you are not able to take that money with you. Since the plan is 100% funded by your employer, the money stays with that company whether you do, or not.

5 Key Takeaways for HRAs

1. Employers (not employees) fund HRAs
2. There are different types of HRAs and each have different rules
3. HRAs are tax-advantaged accounts
4. Eligible expenses vary by account but can include premiums, copayments, prescriptions, and other OTC costs
5. HRAs are not portable and cannot be moved from one employer to another

I certainly hope this has been helpful in some way. If you are unsure if your employer offers an HRA, or other additional employee benefits, reach out to your HR department for more information. If you are a Medcom HRA participant and have questions about your account, please contact our Customer Care support team! Click HERE for more information about an FSA, or HERE for the details about HSAs.