Health Reimbursement Arrangements (HRA) Administration
Health Reimbursement Arrangements (HRAs) are yet another variation on healthcare funding. With an HRA, the employer — not the employee — sets aside a specific amount of pre-tax dollars for employee healthcare expenses. The plan must be funded solely by the employer, and it can only provide benefits for substantiated medical expenses.
Like HSAs, HRAs are typically offered in conjunction with a High-Deductible Health Plan, which reduces premium costs. This cost savings can then be invested in funding the HRA.
All employer contributions are 100% tax deductible to the employer and tax-free to the employee. Employers may determine what expenses the HRA funds are used for, from all health-related eligible expenses and deductible/co-pay costs to limited use such as emergency room visits. HRAs can also be used to cover retired employees.