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Health Reimbursement Arrangements
Premier Pension Solutions
Health Reimbursement Arrangements

As the cost of medical care escalates year after year, employers are virtually forced to cut health benefits or raise plan deductibles to hold down premium costs. In establishing a Health Reimbursement Arrangement, employers can assume a modest additional financial risk, while saving thousands of dollars in premium costs. 

The Health Reimbursement Arrangement (HRA) is an Internal Revenue Service (IRS) regulated, employer funded medical expense reimbursement plan taken from section 105 of IRS code. An HRA can be coupled with a high deductible health plan or it can be offered on a stand-alone basis. Whether or not the HRA is coupled with a high deductible health plan or not - the main point is an employer-funded account for employees, under which unused amounts are NOT forfeited at the end of each plan year, but can be carried over for use in future years. 

The plan design options are virtually limitless. For example, an employer may fund the HRA from day one of the plan year or they may fund it on a pay period basis or monthly basis. The employer may choose to allow a roll over at the end of the plan year or not allow a roll over, however this is one of the most attractive benefits of an HRA. The employer may cap the maximum accumulation of funds. The employer may allow all IRS allowable expenses to be paid through the plan or they may limit or restrict what expenses are allowed. Primarily, there are 3 primary mandatory elements.
  1. Employer funded only (No employee funding is allowed)
  2. Only income tax deductible medical expenses may be paid from HRA funds
  3. No withdrawals for any purpose other than qualified medical reimbursement expenses
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