Unpacking the Basics: What is a HRA Health Plan and How Does it Work?

Unpacking the Basics: What is a HRA Health Plan and How Does it Work?

Health reimbursement arrangements (HRA) are becoming increasingly common in the insurance industry. An HRA is an employer-funded reimbursement account that reimburses employees for medical expenses not covered by their insurance policy.

How does an HRA work?

An HRA operates by establishing an account that reimburses employees for certain medical expenses, such as co-pays, deductibles, and coinsurance. Once an employee incurs a medical expense, they submit a claim to their employer for reimbursement. The employer then disburses the HRA funds to the employee for the cost of the medical expense, up to the HRA balance.

Types of HRA Plans

There are various types of HRA plans, including:

• Standard HRA: The employer funds the account and chooses the amount of the benefit.
• Integrated HRA: This plan is combined with a high-deductible health plan (HDHP) and aims to supplement the coverage provided by the HDHP.
• Qualified Small Employer HRA: Small employers with fewer than 50 employees can establish a QSEHRA to reimburse employees for medical expenses.

Advantages of an HRA plan

There are several benefits to implementing an HRA plan for employers and employees alike. Some of these include:

• Cost Savings: Employers can save money by funding an HRA account instead of providing a comprehensive insurance plan.
• Flexibility: Employees can use HRA funds for a wide range of qualified medical expenses. This allows for greater flexibility and choice in healthcare options.
• Control: An HRA plan allows the employer to choose the types of expenses that are eligible for reimbursement.

Conclusion

Overall, an HRA plan can be an excellent option for both employers and employees to provide flexibility and control over healthcare expenses. Understanding the types of HRA plans available and their benefits can help companies make informed decisions when selecting a healthcare plan.