Health Reimbursement Arrangements

Health Reimbursement Arrangements (HRAs) are accounts funded by an employer to cover healthcare services. The HRA Plan Document will specify the services that are covered by the HRA and any special reimbursement rules such as coverage for copays, coinsurance and/or deductibles. Additionally, funds or a portion of funds remaining in the participant's account at the end of the year may rollover to the next plan year. The employer decides if the funds are rolled from year to year and how much rolls over, such as all funds, a percentage a maximum amount or a combination thereof.

A Health Reimbursement Arrangement can be an excellent option for employees as it provides an incentive for managing an individual's or family's healthcare expenses, especially if funds rollover from year to year.

Here are a couple sample HRA plan designs:

Sample HRA Design 1 - First Dollar Coverage
Sample HRA Design 2 - Deductible Bridge
An HRA can be provided to cover 100% of a participant's deductible and co-insurance. As claims are incurred, the HRA is used to pay for medical services obtained but cannot be used for other services such as prescriptions, dental or vision care. Similar to the first design, the HRA is only for deductible and coinsurance, but in this model, the participant must meet a portion of the deductible prior to the HRA being used and then it covers only half of the out-of pocket coinsurance.