A Health Reimbursement Account (HRA), also known as a health reimbursement arrangement, is an IRS approved, tax advantaged, health benefit plan that reimburses employees for out of pocket medical expenses and individual health insurance premiums. The HRA is 100% funded by your employer. The terms of these arrangements can provide first dollar medical coverage until the funds are exhausted or insurance coverage kicks in. The contribution amount per employee is set by the employer, and the employer determines what the funds can be used to cover.
HRA FAQs - Health Reimbursement Account Rules
1. Do I have to have health insurance to have a health reimbursement account (HRA)?
HRAs are usually provided by employers to complement a higher-deductible health plan (HDHP), but can be paired with any type of health plan or offered alone. There is no rule requiring you to have health insurance in order to have a health reimbursement account.
2. Who owns the HRA?
According to IRS rules, your employer.
3. Who can put money in my HRA?
According to IRS rules, HRAs are fully owned and funded by the employer.
4. Does the money in my HRA earn interest?
Typically, no. Under most HRA plan rules, the accounts aren’t individually owned bank accounts that are eligible to earn interest.
5. What is an eligible health care expense for an HRA?
Eligible expenses under an HRA plan are determined by your employer and might include
- Health insurance premiums
- Health insurance deductibles
- Coinsurance and co-pays
- Other expenses included in IRS Publication 502—Medical and Dental Expenses as eligible or qualified expenses
6. How much can be contributed to my health reimbursement account?
The amount contributed to your HRA is up to your employer.
7. What is the maximum reimbursement amount from my HRA?
The health reimbursement account contribution rules are determined by your employer. Most plans will reimburse eligible expenses up to the full available balance in your HRA. If your plan is based on an accrual, you'll only be reimbursed the amount that you've earned in the plan.
8. What happens to the money in my HRA if I leave my job or retire?
This health reimbursement account rule is up to your employer. Most often, the unused money stays with the company when you terminate employment.
9. Does the money I have in my HRA roll over from year to year?
This health reimbursement account rule is up to your employer.
10. Can I use the money in my HRA to pay for my family's medical expenses?
Yes. The money in your HRA can be used to pay for eligible medical expenses of any family member who qualifies as a dependent on your tax return. However, the dependent must be covered by your HRA.