HRA company, Clarity Benefit Solutions, shares benefits of an HRA that employees might not be aware of.
Health Reimbursement Accounts (HRAs) are employer (or plan sponsored) funded accounts that are set up by the employer for its employees and contributes a certain amount of money each year for an employee to use for medical expenses not covered by the employee’s health plan, such as deductibles or coinsurance. They differ from the more widely known Health Savings Accounts (HSAs), which are accounts that employees contribute to. Here are some HRA benefits that employees may not know exist.
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HRAs can help lower employees’ health care costs by being set aside for eligible out-of-pocket healthcare costs, deductibles, copayments, and prescriptions. Some HRAs may even pay health insurance plan premiums. These plans can be offered alone or paired with a high-deductible health plan (HDHP). They may also be offered with a Flexible Spending Account (FSA), which will help employees cover additional uninsured health expenses.
Since HRAs are employer-funded, they do not affect employees’ income. Plus, these plans offer a great deal of flexibility. Employers can choose how much money they want to contribute for each employee each year, which is an effective way for employers to control costs. Plus, all contributions that are made by employers are completely tax-deductible; and when an employee files a claim, reimbursements are tax-free. For employees, HRAs translate into additional personal healthcare freedom, since they have more of a choice regarding their healthcare options.
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One surprising HRA advantage is that over the counter (OTC) medications are covered under HRAs—as long as the employ obtains a prescription from a medical practitioner. HRAs can also be used for any family member, as long as he or she is listed as a dependent on the employee’s tax return and enrolled in a group health plan.
Finally, certain HRA plans allow employees to roll over any unused HRA balance to the following year—a wonderful benefit since healthcare expenses for an individual can fluctuate greatly from year to year.
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