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Health Reimbursement Arrangements (HRA)

Employers of all sizes are searching for affordable employee coverage that allows them to balance their books. That search is especially intense among small businesses, where a few dollars can make a significant difference. One of the most successful solutions is the consumer-driven health movement as seen through Health Reimbursement Arrangements (HRAs).

With HRAs becoming a growing trend toward greater healthcare consumer responsibility, these programs benefit both you and your employees. HRAs are a great way to encourage employees to make wiser healthcare and lifestyle choices, while enabling employers to better manage their benefit costs.

Employers who offer an HRA have a powerful recruiting and retention tool. Outsourcing this important element of your benefits package to the experienced professionals at Acclaim Benefits ensures that you and your employees receive the resources and support to make the plan a success.

Safe Harbor Guidance

The IRS provides safe-harbor guidance for HRAs that permit carry-overs of unused HRA amounts into subsequent plan years if certain conditions are satisfied, including:

HRA must be credited/funded solely with employer contributions.
HRA cannot be credited/funded with pre-tax salary reductions under a cafeteria plan.
HRA can only reimburse substantiated medical care expenses incurred by employees (or former employees) and their spouses and dependents.
HRA can reimburse certain health insurance premiums but not long-term care.
Unused HRA amounts cannot be cashed out, but plans can be designed to allow terminated employees to spend down balances after termination.

HRA Service Features

24-hour turnaround claims processing
Direct deposit
Electronic enrollment (Web and IVR)
VEBA trust administration (partnering trust and custody services)
Quarterly participant account statements (optional)
24/7 account access (Web and IVR)
Toll-free call center and customer service e-mail
Electronic notification program for participants

HRA Defined

An HRA is an individual healthcare reimbursement account set up with a fixed annual amount for each covered employee. While similar to a healthcare FSA, an HRA is funded solely by the employer and stays with the employer if the employee leaves or the plan is terminated. Employers determine the funding level of the HRA, which employees apply toward healthcare purchases.