HRA Archives - Advanced Reimbursement Solutions

Is an HRA Right for You?

In the past five years, there has been an increase in the number of employees opting for high-deductible health plans. High-deductible health plans are defined as those with deductibles for family coverage and individual coverage. The growth of these deductible health plans has led to the increase of health savings accounts (HSAs) and health reimbursement arrangements (HRAs). As an employer, you need to be conversant with HRA info to determine whether they are right for you.

What is an HRA?

An HRA is an arrangement, which in combination with high-deductible health accounts pays for those medical expenses that your insurance policy does not cover. If your medical expenses are less than the deductible, you can cover them with an HRA.

Should I Consider It?

There are 3 main reasons why you may want to consider an HRA:

• Flexibility and control. Employers retain control over HRAs and determine how the funds within them can be used.
• Unused funds are retained in the account. If an employee has not spent the funds in the HRA at the end of the year, the employer can retain them in the account.
• Non-portability. The funds in an HRA are not accessible to employees. These funds are referred to as notional dollars and can only be spent when submitted to the HRA to be reimbursed.

How Does the Funding Work?

Contributions for every individual within the medical plan are made by the employer. To determine how much money can be spent, the funds must be included annually in the expense line of the employer for financials.

Since 100% of the contributions to the HRA are made by employers, they can be accessed at any time by employees for medical expenses. However, the funds are not portable, meaning that the employee cannot cash the money out as in HSAs.

Many employers utilize the carryover function, which is a unique feature of the health reimbursement arrangement. This function allows them to roll over all or a part of the remaining money year to year. Usually, employers build up the dollars over a cycle of 3 years and use them to cover the expenditure of their medical plans.

An employer has many freedoms and choices within a health reimbursement arrangement. Covering the medical expenses of employees should be a priority, and the team at Advanced Reimbursement Solutions helps with determining how to structure contributions to the HRA among many other services. We have locations in Phoenix and Wilmington. Contact us today to book an appointment and learn more.

What are the Advantages of an HRA?

Also known as a health reimbursement account, a health reimbursement arrangement or HRA is a tax-advantage, employer-funded, and IRS-approved health benefit plan that is used to reimburse employees for not only out-of-pocket medical expenses but also personal health insurance premiums. It helps to measure the value of managers and employees in an organization by analyzing the cost incurred in hiring, training and developing them.

How Does It Work?

HRAs are notional arrangements where no expenses are incurred until reimbursement is paid. This helps an employer reimburse an employee after the employee has incurred an approved medical expense. This is mainly useful for companies that want to control and retain their cash flow.

Below are a few advantages of an HRA for both employers and employees.

Advantages for Employers

1. Cost Control

An HRA allows employers to decide on the amount of money they want to contribute to each of their employee’s HRA accounts. This helps employers plan ahead since they know the amount of money they are likely to spend on these benefits. In addition to HRAs, most employers also offer a high deductible health plan, which results in reduced premiums for both employees and employers.

2. Talent Recruitment

An HRA benefits package ensures employers are always attracting and retaining talent. Besides, the benefits to employees ensure a company’s benefits package shine such that they can convince prospects to accept the company or employer’s offer.

3. Flexible

Since the employers are the ones who plan and contribute, they have the ability to plan something that suits them.

Advantages for Employees

1. Reduced Healthcare Cost

Paying for healthcare services is usually very costly. If an employee is offered an HRA as well as a high deductible health plan (HDHP), there will be a low premium cost, which will lead to a reduction in the cost of healthcare for employees. Moreover, employees can use HRA funds to pay for their deductibles, co-payments, and co-insurance.

2. Rollover

If the employer’s benefits plan allows for rollover, the unused balance will always roll over to the next year. This is beneficial to employees since their healthcare expenses can decrease or increase depending on the yearly rollover.

3. Tax-Free Reimbursement

Whenever employees file claims about a qualified medical expense, the reimbursement is usually tax-free.

For more information, simply contact Advanced Reimbursement Solutions in Phoenix and Wilmington. Contact us today to book an appointment to speak with one of our team members!

Frequently Asked Questions About a Health Reimbursement Arrangement (HRA)

A health reimbursement arrangement (HRA), also known as a health reimbursement account, is a health spending account provided by an employer. The money in this account, which is funded by an employer, reimburses employees for out-of-pocket medical expenses that are not covered by company-sponsored health insurance.

What expenses are covered by HRAs?

A health reimbursement arrangement (HRA) is a tax-advantaged reimbursement account, so the IRS determines the types of expenses that are covered by the money in this account. Generally, qualified expenses include medical equipment, medications, cosmetic procedures, reconstructive procedures, doctor visits, dental and vision care, and other qualified medical expenses that require a prescription.

How does an HRA work?

The employer funds an HRA account each year. The money is available to employees at the beginning of each year and can be used to pay for qualified medical expenses determined by the employer. An employer not only identifies the type of expenses the money will cover, but also when the money is used.

Is there a limit to the amount of money an employer can contribute?

There is a limit to the amount of money an employer can contribute to health reimbursement arrangements (HRAs).

Is an HRA taxed?

HRA money is not included in your gross income because it’s an employer who contributes it. This money is, therefore, not taxed if it is used to pay for qualified medical expenses.

Eliminate the Hassle of Medical Reimbursement

Advanced Reimbursement Solutions is one of the most reputable medical reimbursement companies that can help eliminate the hassle involved in medical reimbursement. If you want to learn more about a health reimbursement account (HRA) or any other health accounts, feel free to contact us today and speak with one of our experts in Wilmington or Phoenix.

The Difference Between an HRA and HSA

Individuals can pay for healthcare services with a Health Reimbursement Account (HRA) or a Health Savings Account (HSA), among other methods. The HRA is a reimbursement account, offered by an employer. An HSA, on the other hand, is a savings account for the consumer. When providing medical services, it is important to know the difference. This can save a lot of headache and confusion from employees and patients alike.

What HRAs Mean for Medical Service Providers

An HRA is a means of paying for medical services. If a patient needs assistance to pay for their medical bills, the HRA can do just that. Service providers and insurance companies are still able to make a profit, and patients are able to receive the care that they need.

HSA for Reimbursement Purposes

The primary purpose of an HSA is for the employee or individual to set aside pretax money for healthcare costs. While HSAs are not reimbursement accounts, like HRAs, they do come into play in the medical billing process. Patients with HSAs can use their accounts to pay for qualified medical expenses. This makes medical care more affordable for patients, and it makes the billing process easier for service providers.

Combining HRAs and HSAs

While HRAs and HSAs both allow patients to pay for medical expenses with pre-tax money, they are different in almost every other way. This is why it is important for patients to combine them when paying for medical care. Combining the two accounts to pay for medical expenses eases the financial burden of the patient, and it allows medical service providers to properly care for patients.

Learn More

As a medical reimbursement company, at Advanced Reimbursement Solutions, we want to help you with the complicated process of medical reimbursement. Simplify your medical billing process by having a good understanding of both HRA and HSA. Be sure to contact us today in Phoenix or Wilmington with any further questions.

Why HRA Insurance is a Great Idea for Employers and Employees

HRA, or Health Reimbursement Arrangement, is a health reimbursement account which is IRS-approved and employer-funded. Tax advantages are provided to employers while offering personalized health benefits which reimburse employees for out-of-pocket medical expenses and health insurance premiums. As it includes so many benefits, it’s a great option for both employees and employers for out-of-pocket medical expenses and lowering tax liability.

Not the Same Thing as Health Insurance

The difference between a Health Reimbursement Arrangement and standard health insurance is that HRAs allow employers to make contributions to an employee’s account that provide reimbursement for eligible medical expenses. What this means is that it covers expenses not covered by their standard healthcare plan, like deductibles. Granting employees this option provides employers with certain tax benefits while also covering medical expenses that aren’t covered by their employee’s standard health insurance plan. These tax benefits are definitely worth exploring.

Benefits of HRA Insurance

One of the top benefits of employer-funded HRAs is that contributions are 100% tax deductible. If these accounts are structured properly, employers can not only cut healthcare costs without reducing health care benefits to employees, but also lower their own income tax liability at the end of the year; it’s a win-win for both employee and employer. Furthermore, employers have full control over the costs eligible for coverage under the plan.

Whether you’re a small business or a large multinational corporation, offering HRAs to employees is a win-win. Businesses interested in lowering their taxable income and helping their employees with their health care coverage should reach out to our team at Advanced Reimbursement Solutions so we can help get you started. Contact us today in Phoenix or Wilmington to learn more!