An HRA or health reimbursement account is an IRS-approved and tax-advantaged health benefit plan that reimburses covered employees for individual health insurance premiums and out-of-pocket medical expenses. The terms of an HRA provide medical coverage until the funds are exhausted or insurance coverage begins. The employer sets the contribution amount per employee.
1. Who owns the HRA?
It is solely owned by the employer.
2. Is an employee required to be covered by health insurance to have a health reimbursement account?
That depends on the HRA. An employer can offer HRAs to offset a high-deductible health plan, but they can also be paired with any health plan. They can also be offered alone.
3. Do the funds in an HRA accrue interest?
Generally, no. The accounts, in most HRA plans, are not individually owned bank accounts that earn interest.
4. How much can be contributed to my health reimbursement account?
The employer sets the amount contributed to an HRA. Some HRAs have annual limits on contribution.
5. Can an employee use money in their HRA to pay for their family’s medical expenses?
Yes. The money in an HRA can be used to pay for eligible medical expenses of all family members who qualify as an employee’s dependent on their tax return. However, the dependent must be covered by that employee’s HRA.
These are just some of the commonly asked questions when it comes to the ins and outs of having a health reimbursement account. You can learn more by consulting with the team at Advanced Reimbursement Solutions, located in Wilmington and Phoenix. Contact us today to get started.