An HRA (Health Reimbursement Arrangement) account is one in which money is contributed to help offset medical expenses that qualify. An HRA account is just like any other account, but the money can be withdrawn at any time to cover a medical expense without incurring any penalty. Employers fully fund these accounts and a third party administers it for them.
The following are some advantages of HRA accounts.
1. Funds that are not used up may be rolled over to the next year
A person who has an HRA account is never forced to seek care options that they do not need. The reason behind it is so that they can at least spend money which is in their account and avoid losing it. Notably, this is because money that remains unused in an HRA account is rolled over to the following year. This is unlike most other health savings programs.
2. There is no uncertainty in knowing costs of HRA
Employers know how much they will spend when it comes to HRAs. This certainly helps to budget. Some savings may be made, but this turns out to be money that helps the bottom line. Often with HRA insurance, employers save up to 50% of their total health care coverage costs.
3. The money in the funds is never available to the employee to use as they desire
Holders of HRA accounts can make claims to the HRA for funding for medical conditions that qualify. At no time, however, is this money available to the employee to use as they deem fit. No spending waste occurs because the money is under the management of a third party who controls it for the employer.
4. Employees save on medical expenses
The majority of HRA reimbursements are not thought of as income. These payments that employees receive are not part of the total salary. Employees save on medical expenses by using the pre-tax money.
5. Reimbursements that employees receive are tax-deductible expenses
With any reimbursements that employees receive for medical expenses being an expense that is tax-deductible, the cost of healthcare coverage for the employer is close to neutral. Since premium costs rise every year, this savings is significant.
When you’re providing healthcare services, it’s vital you put your patients’ interests at the forefront of your work. Do not let yourself get mixed up over matters of finance and insurance that can impact your practice. At Advanced Reimbursements Solutions in Phoenix and Wilmington, we are experts in all issues to do with HRA accounts. Contact us today to learn more or to get started with our helpful services.