Introduction to HRAs

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Your Introduction to HRAs

(Health Reimbursement Arrangement(s)

What is a HRA?

A HRA (Health Reimbursement Arrangement) is a health reimbursement plan that is funded through sections 105 and 106 of the IRC (Internet Revenue Code). This piece of tax code allows employers to use revenue dollars to pay for employees medical losses and insurance premiums. This type of reimbursement plan has been referred as Consumer-Driven Healthcare Plans, personal care accounts, and even personal savings accounts. June 26, 2002, the U.S. Treasury Department defined through its revenue ruling procedures that they would allow reimbursements through Section 105. Stating that Health Reimbursement Arrangements (HRAs) could be used to fund excess loss health insurance expenditures and insurance premiums.

Here's how a HRA works

The most common use of an HRA (Health Reimbursement Arrangement) is in congruence with a high deductible health plan (HDHP). HRA's will help to enhance your health benefit plan, reduce your overall health insurance costs, and offer better benefits to your employees. Expenses that are not covered by your health insurance plan can be reimbursed through your HRA. In most examples, an employer will fund and account with premium savings from his new high deductible health plans. Employees will then be reimbursed for losses for qualified medical expenses like copays, deductibles, coinsurance, vision, prescriptions, chiropractic care, and even most dental expenses. All reimbursements are not considered taxable income for the employee and offer a tax deduction for employers.

Does you current consultant or broker manage the healthcare utilization on your health plan? Please take a look at the advantages of a HRA plan

HRAs should be seriously looked at as being a piece of your employer sponsored group health insurance plan

 

Health Reimbursement Arrangement