DEFINITION
A health reimbursement arrangement (HRA) is an account-based health plan employers can offer to employees instead of a traditional group health plan.
Key Takeaways
- A health reimbursement arrangement (HRA) is an employer-owned health savings account that can help pay some of your medical expenses.
- Your employer has a lot of control over the way the HRA is set up and administered, including how the HRA is structured, the amount of contributions, and which types of medical expenses qualify.
- There are different ways to access your HRA funds depending on the options your employer selected.
- It’s essential to read the details of your HRA so you understand its design and know how to use it.
Definition and Examples of a Health Reimbursement Arrangement
A health reimbursement arrangement (HRA) is an account-based health plan employers can offer to employees instead of a traditional group health plan. The employer adds funds to this account. When you have qualified medical expenses such as a coinsurance or copayment, that cost comes out of your HRA until your HRA fund is depleted.1
- Alternate name: Health Reimbursement Account, Individual Coverage HRA
- Acronym: HRA, ICHRA
How Do You Use HRA Funds?
The way you access your HRA funds also varies between companies. However, there are three common methods employers can select.
- Direct reimbursement: With direct reimbursement, you don’t need to do anything to get the money out of your HRA. It goes directly to your medical provider.
- Debit card: Some HRAs are linked to a debit card you can use to pay for qualified medical expenses.
- Reimbursement request: You first pay for the medical expenses, then you request a reimbursement from your HRA.
What Do Health Reimbursement Arrangements Cover?
While the specific terms of your HRA may vary based on what options your employer selected, you can typically use it to cover medical expenses, including:5
Health Insurance Marketplace. “How an Individual Coverage Health Reimbursement Arrangement (HRA) Offer Works.” Page 1.
- Coinsurance
- Copays
- Medical plan deductibles
- Medical plan premiums
An excepted benefit HRA can be used to pay for medical care, such as:6
- Vision coverage
- Dental coverage
- Coinsurance
- Copays
- Short-term, limited-duration insurance
- Health care costs not covered by your primary health insurance
While many medical expenses are covered, it’s important to check the details of your plan. For instance, some HRAs don’t allow you to use the funds to cover your copays.