A Health Reimbursement Account (HRA) is an employer-sponsored benefit scheme that allows businesses to contribute monies to a designated account for their workers' reimbursement of approved medical expenditures. It is a form of health benefit plan that offers employees a tax-efficient alternative to cover out-of-pocket healthcare expenses.
Example
When an employer includes an HRA in its employee benefits package. The company deposits a specific amount of money into each employee's HRA account, which may be used to cover qualified healthcare costs. Deductibles, co-pays, prescription drugs, and other eligible medical expenses are examples of such costs. Employees can make claims for reimbursement by producing documentation or receipts for their costs. The money in the HRA are normally non-taxable to employees and can be utilized to offset their healthcare expenditures throughout the year. The particular regulations and criteria for HRA plans may differ based on the employer's plan design, including contribution limitations, allowable costs, and rollover restrictions. 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.
