Health Reimbursement Plans

Health Reimbursement Arrangements, or HRA's are written plans that allow the employer to fund certain out of pocket medical expenses for their employees, while at the same time controlling and possibly lowering their total cost spent on benefits.  Because of the flexible design nature of the HRA, employers may be able to select which medical expenses are reimbursed, how much the plan will reimburse and if plan benefits may be rolled over from year to year. There are several plan designs when setting up an HRA. Two of the more popular designs are:

A deductible plan - this plan only reimburses the employee for a portion of their deductible.  This plan allows the employer to implement a high deductible health insurance plan, thereby lowering their insurance premiums, while still allowing the employee to have a lower out of pocket expense.
A comprehensive plan - this allows all medical expenses not covered by insurance to be paid for from the HRA. 

The flexible nature of the HRA design allows employers to control and possibly lower the cost for their benefit plans, while still being able to offer a comprehensive and competitive benefit package for their employees. Health reimbursements are allowed under Sections 105 and 106 of the Internal Revenue Code.  As with all plans which allow an employer tax deductions, the IRS imposes rules and restrictions on these plans.  For additional information or ideas please feel free to contact us at the number below.

Have a Question? Feel free to call us at 405. 720.0333