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 income tax free to the employee.
How does an HRA Work?
Depending on the HRA chosen, the employer designates which reimbursable expenses will be approved. The employer will then select one or multiple job classes and set a contribution amount per class. Once the terms of the plan are chosen a per employee per month amount of money will be set aside. Then after an employee pays for a designated reimbursable expense, they can submit for reimbursement.
What does this mean for Employers?
This means that employers can control how much they are contributing to employee benefits each year, while still being able to off competitive and tax-free benefits to their employees.
What does this mean for Employees?
If you’re an employee and your employer is switching to an HRA, it means you will have the flexibility to find an individual health plan that fits you best, and will be reimbursed for it. This is great news, as this an extremely customizable option to a group plan.
What does this mean for the market?
We believe that HRAs are a game changer to empower employees to be their own advocate for their health care.
If you think an HRA might be right for your business learn more or contact Benafica today at 651.259.9000.