Health Reimbursement Arrangement (HRA)

A Health Reimbursement Arrangement (HRA) is a type of employer-funded health benefit plan that reimburses employees for out-of-pocket medical expenses and can also cover health insurance premiums. Employers set aside funds into individual employee accounts to help offset healthcare costs.

Example #1

An employee visits the doctor for a check-up and pays for the appointment using their own money. After submitting a claim and providing receipts, the employer reimburses the employee for the cost of the visit.

Example #2

An employee purchases prescription medication and submits the receipt for reimbursement to their employer through the HRA.

Misuse

One potential misuse of HRAs could involve employers failing to properly educate employees on how to submit claims or imposing unnecessary bureaucratic hurdles that make it challenging for employees to access their entitled reimbursements. This is important to guard against because employees may end up paying more out-of-pocket costs than necessary, which goes against the spirit of offering health benefits.

Benefits

The benefit of an HRA is that it helps employees manage healthcare expenses that may not be covered by insurance. For example, if an employee needs to see a specialist not included in their insurance network, they can use funds from the HRA to cover a portion of the consultation fees, reducing their financial burden.

Conclusion

Health Reimbursement Arrangements (HRAs) provide a valuable financial safety net for employees, offering reimbursement for medical expenses that may not be fully covered by insurance. Ensuring employees have easy access to these funds can significantly aid in managing healthcare costs, promoting better health outcomes, and fostering a fairer and more supportive work environment.