A Health Reimbursement Account (HRA) is an employer-sponsored benefit program that allows employers to contribute funds to a designated account for their employees to reimburse eligible medical expenses. It is a type of health benefit plan that provides employees with a tax-advantaged way to cover out-of-pocket healthcare costs.
When an employer establishes an HRA for its employees as part of their overall benefits package. The employer sets aside a certain amount of money into each employee's HRA account, which can be used to reimburse eligible healthcare expenses. These expenses may include deductibles, co-pays, prescription medications, and other qualified medical expenses. Employees can submit claims for reimbursement by providing documentation or receipts for the expenses incurred. The funds in the HRA are typically non-taxable for the employees and can be used to offset their healthcare costs throughout the year. The specific rules and guidelines for HRA plans may vary depending on the employer's plan design, such as the contribution limits, eligible expenses, and rollover provisions. HRAs are often offered in conjunction with a high-deductible health plan (HDHP) or other health insurance options to provide additional financial support for employees' healthcare needs.