A Health Reimbursement Arrangements is an employer-owned accounts that allow participants to be reimbursed for eligible out-of-pocket expenses, including co-pays, coinsurance and deductibles. Health Reimbursement Arrangements are typically tied to a Consumer Driven Health Plan, or High Deductible Health Plan (but they don’t have to be), typically creating lower health insurance premiums for employees and employers. Employers will contribute a predetermined dollar amount for each employee into the account and the employee will have a set amount of time in which the funds must be claimed.
Health Reimbursement Arrangements allow employees to be reimbursed for eligible expenses from a pool of funds set aside by the employer. In many instances, the employee has to meet a certain deductible threshold before the Health Reimbursement Arrangement will start to pay out. For example, your deductible is $1,500 and your employer’s Health Reimbursement Arrangement is set up to pay for any deductible expenses above $500. You must submit documentation showing valid deductible expenses that total at least $500.01 before any payments will be issued. You may submit claims as frequently or infrequently as you would like, however, no reimbursements will be issued until the $500 threshold has been reached.
Eligible expenses must be incurred for the care of the employee and/or eligible members of the employee’s family and take place within the benefit plan year.
In other plans, benefits accrue from month to month. For example, your plan may provide $1,200 for the entire plan year accrued at $100 each month. You may only be reimbursed up to the maximum amount you’ve accrued at the time of the claim and reimbursed for the balance of your claim once you’ve accrued more funds. Contact your human resources department for information about your specific HRA fund availability.