Unless you’ve been living under a rock for last 12 months, I’m sure you’re aware that there are many changes on the horizon for US Health Care and Health Insurance.  When an issue as highly contested as Health Care, is being actively debated on a daily basis in arenas such as the US Capital, State Capitals, and every Barber Shop in America, it is very important to understand the words and terms being used.

Over the next few weeks I will highlight a different Health Care term or phrase and enlighten you the reader on its purpose and significance.

Today we will be discussing Health Reimbursement Accounts (The HRA).  An HRA is an account owned and funded by a business or organization for the purpose of reimbursing the employees of that business or organization for qualified, out-of-pocket medical expenses.  HRAs are typically coupled with a High Deductible health plans, however HRAs may be used in conjunction with most HMOs, EPOs, and PPOs as well.

What are the Advantages for Employers?

• Employer contributions to HRAs are tax deductible (please consult you accounting professional for details),
• An HRA eases the transition (think employee backlash) from a higher premium HMO or EPO to a High Deductible plan,
• An HRA is often perceived as an attractive employee benefit,
• Employer funds contributed to an HRA can be rolled over from year to year.

What are the Advantages for Employees?

• An HRA mitigates out-of-pocket expenses for medical costs such as deductibles, co-pays, and pharmacy services,
• All funds used by employees from an HRA are not taxed as income,
• HRA may be used in conjunction with Flexible Spending Account (FSA).

What is covered for reimbursement to Employees?

• Out-of-pocket costs associated with their health plan, including deductibles, co-pays, and co-insurance charges for covered hospital, physician and pharmacy services,
• Costs for health-related items such as over-the-counter medications, eyeglasses/contact lenses, dental and orthodontic work,
• NOT COVERED are most cosmetic and/or elective services as well beautification products (i.e. shampoo, lotion, etc.).

 The HRA is easily administered account that can provide huge benefits (Tax benefits, reduction of employee expenses, employee value perceptions) to both Employer and Employee.  If you are interested in finding out more about the HRA and if an HRA is right for your organization please contact your employee benefits administrator. 

 - In a completely unrelated topic I encourage you to follow this link to Chris Brogan’s website.  He talks about Travel, in another installment of the Overnight Success series.  I know I kinda sweat CB, but his advice is on point and I feel it transcends the Online Arena and can be applied to any industry of Business.

“If you’d like to talk about your Insurance Risk, contact me today. We can talk about your exposure, and begin our relationship!” 

Thank you, 

Ryan H. 

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Related posts:

1. Health Care Cost Increase in Double Digits
2. High Deductible / Health Savings Account Plans as a Savings Weapon
3. Small Businesses Pay More for Health Coverage
4. Deduct Insurance Premiums on 2009 Taxes
5. Parents, Children Now Covered Under Group Health till 29