1. 1. What is a Health Reimbursement Arrangement (HRA)?
2. 2. How is using an HRA like giving myself a raise? 3. 3. Am I eligible for an HRA?
4. 4. What happens if I don't use all of the money in my HRA by the end of the year?
5. 5. How does it work?
6. 6. How much money will my employer put into my HRA?
7. 7. How much money can I put into my HRA? 8. 8. When can I start using the money in my HRA? 9. 9. Is the money tax-free when I withdraw? 10. 10. What expenses are covered under my HRA? 11. 11. Are all over-the-counter ("OTC") drugs covered by
an HRA?
12. 12. What about vitamins, toothpaste, soap, and shampoo?
13. 13. Is the mileage on my car ever covered? 14. 14. Is the HRA the same as a Healthcare Flexible
Spending Account (FSA) or Health Savings Account (HSA)? 15. 15. If I have an HRA, can I also have a Healthcare
Flexible Spending Account (FSA)? 16. 16. Does my HRA earn interest?
17. 17. What happens to my HRA if I leave or am terminated from my job?
18. 18. Can I continue my HRA on COBRA?
19. 19. If I have an FSA and HRA Plan and I submit an Explanation of Benefits (EOB), which plan will pay first? 20. 20. When must the expenses I submit have been
incurred in order to be reimbursed?
1. What is a Health Reimbursement Arrangement (HRA)? A Health Reimbursement Arrangement (HRA) is a medical expense reimbursement plan in which your employer may reimburse you for qualified medical expenses. Only employers can make contributions to an HRA. An HRA may be offered together with a health plan, sometimes called a consumer-driven health plan, or on a stand-alone basis.
Usually you can use your HRA money to pay for eligible healthcare expenses, such as your health insurance plan's annual
deductible or other out-of-pocket medical expenses. You may even be able to use it to pay for over-the-counter medications. Your employer determines what expenses are eligible for reimbursement from their HRA sponsored plan, so it is
important to check with your Human Resources department for this information.
2. How is using an HRA like giving myself a raise?
You can use the money in your HRA account to pay for things you used to pay for out of your own pocket. So your raise comes from all the money you'll save by using your HRA.
3. Am I eligible for an HRA?
You are eligible for an HRA if you are enrolled in a health plan that includes an HRA. If you are in a health insurance plan but are unsure if an HRA is available, talk to your employer. 4. What happens if I don't use all of the money in my HRA by the end of the year?
If you don't use all of the money in your HRA during the year, it may carry over to the next year or it may not. Some employers have placed caps on how large an HRA can grow. Check with your employer to see if your plan allows carryover and what maximums, if any, apply to the HRA.
5. How does it work?
Your employer will establish an HRA for you and define what expenses are eligible for reimbursement. You may be given a debit card to use for the payment of eligible expenses. If your employer doesn't provide a debit card, you will need to submit receipts to get reimbursed by check or direct deposit. If your company is set up for it, some of your expenses may be
reimbursed without the need to submit claims. Check with your Human Resources department to find out the details of how your company plan offers reimbursement.
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6. How much money will my employer put into my HRA? That's up to individual employers, who will make contributions on a per-paycheck or annual basis. The total annual contribution is generally less than the annual deductible under your health insurance plan. Check with your employer to learn the exact amount and when funds are available.
None. You do not make contributions to your HRA. 8. When can I start using the money in my HRA?
As soon as the money is available to you from your HRA, you can start using it. However, you can only spend up to the amount in your HRA at the time of reimbursement. If you have an expense that is more than the amount currently in your HRA, and will be receiving additional HRA deposits from your employer, you can pay for it out-of-pocket and submit your receipt for reimbursement when the money becomes available. 9. Is the money tax-free when I withdraw?
Yes. Your money is not taxed if it is withdrawn for qualified healthcare expenses. You may view a list of eligible expenses, but it is important to talk to your Human Resources department for more details, since your company decides what is eligible for reimbursement with the HRA dollars.
10. What expenses are covered under my HRA?
Usually most healthcare expenses, including prescription drugs, can be paid for using your HRA money. You may also be able to use your HRA to pay for many other qualified medical expenses that are not covered by your health insurance plan, such as over-the-counter medications, eyeglasses, or contact lenses. Some employers restrict the use of HRA dollars to very specific categories of expenses. You should check with your Human Resources department to find out what is eligible.
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11. Are all over-the-counter ("OTC") drugs covered by an HRA? Each employer determines what expenses will be eligible for reimbursement under the HRA that they sponsor. If your plan allows reimbursement for OTC purchases, only medicines and products used for medical purposes are permitted to be included as eligible (not ones for cosmetic purposes or general health). Check with your Human Resources Department to find out what OTC products are eligible.
12. What about vitamins, toothpaste, soap, and shampoo? These items are not permitted to be eligible because they are cosmetic in nature, or merely beneficial to your general health (like soap and toothpaste).
13. Is the mileage on my car ever covered?
doctor's visit, may be covered by your HRA plan. You may even be able to deduct mileage to and from the pharmacy to pick up prescriptions. The mileage rate is announced each tax year. For 2010, it's $.165/mile. Check with the HR department at your company to find out if mileage is covered in your HRA plan and what kind of paperwork you'll need to submit for
reimbursement. The government announces the per mile deduction rate each November for the next year.
14. Is the HRA the same as a Healthcare Flexible Spending Account (FSA) or Health Savings Account (HSA)?
An HRA is not the same as a Healthcare Flexible Spending Account (FSA) or Health Savings Account (HSA). A Healthcare FSA is a reimbursement account made available by your
employer. It saves you money by letting you use pre-tax dollars to pay for items not paid for by your traditional health insurance plan. You can access your entire year's worth of contributions at the start of your employer's benefit plan year. IRS rules state that you lose (forfeit) any remaining money in your FSA if you did not use it all by the end of the plan year, which is December 31 for most employer plans.
An HSA is different from FSAs and HRAs. You can only make or receive contributions to your HSA if you are enrolled in an eligible high deductible health plan (HDHP). You may tap the funds in your HSA for eligible medical expenses on a tax-free basis, or use the funds for any other purpose (in which case, income and penalty taxes will apply to the funds you withdraw). Additionally, employees can take their HSA with them if they leave their employer—this cannot be done with an FSA or HRA. 15. If I have an HRA, can I also have a Healthcare Flexible Spending Account (FSA)?
Yes. If you participate in an HRA, you can also have a
Healthcare FSA. Usually you can use the FSA to pay for eligible out-of-pocket medical expenses (including the remainder of the annual deductible under your health insurance plan) after you have used all of your HRA dollars. However, some plans specify that the FSA pays first, while others allow the participant to direct which account should be used for the reimbursement. Please check with your Human Resources department to find out what ordering rules they have set up for reimbursements.
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No, because HRAs are not actual individual accounts. They are called "notional" accounts, meaning that the balance is strictly a paper entry. The same is also true for FSAs. For HRAs and FSAs, the dollars stay in the company's general assets until a reimbursement to a participant is generated.
17. What happens to my HRA if I leave or am terminated from my job?
HRAs are not portable. If you leave or are terminated from your job, your HRA money stays with your employer. However, some HRA balances may remain available after employment terminates at the discretion of the employer plan sponsor. 18. Can I continue my HRA on COBRA?
You may continue your HRA on COBRA, as long as you continue to participate in the health plan that includes the HRA component. This is in accordance with COBRA provisions. 19. If I have an FSA and HRA Plan and I submit an Explanation of Benefits (EOB), which plan will pay first?
The HRA will pay first unless the employer has set up payment ordering rules for the two health plans. Please check with your Human Resources department so that you are aware of how your reimbursements will be handled.
20. When must the expenses I submit have been incurred in order to be reimbursed?
Your expenses must have been incurred after the establishment of the HRA offering and after you have enrolled in the plan that includes the HRA.
