A Health Reimbursement Arrangement (HRA) is an employer-provided medical reimbursement plan that:

• Is funded solely by employer
• Reimburses employee tax-free for “medical care expenses” (for individual, spouse and/or dependents)
• Funded up to specified dollar amount per coverage period (usually a year)
• Is non-discriminatory in reimbursement for all eligible employees

Benefits to the employer:

• Can pair with a higher deductible plan, which may help save on premium
• Helps provide quality benefits while controlling costs – you may avoid paying for coverage your employees don’t use
• This unfunded approach allows payments to be made from employer’s general assets
• Flexibly designed:
• Timing of HRA fund availability
• Amount of HRA
• Who pays first – employer or employee

Benefits to the employee:

• HRA can help offset increased out-of-pocket expenses of higher deductible
• Lower monthly premiums can reduce employee share of cost
• HRA reimbursements are tax-free
• Increases employee awareness of true cost of health care
• If allowed by employer, HRA rollover option encourages wise spending choices