Important Benefit in the New Era of Health Care

As insurance premiums continue to experience tremendous increases each year, employees are facing higher costs for their health care.  HRAs may be your answer to maintaining affordable health care.

A Health Reimbursement Arrangement (HRA) may be referred to as a personal care account or a consumer-driven health care plan.  HRAs reimburse employees for medical care expenses not already paid for by your employer’s health plan.    The HRA is funded 100% by your employer and is a great way to help stretch your healthcare budget because it allows you to pay for healthcare expenses with money that is not taxed.

How the HRA Works

Your employer will contribute money to the HRA to pay for medical expenses up to a certain amount.

Your employer designs the plan to pay for specific expenses, for example, office visit and prescription copayments. 

You would submit an Explanation of Benefit when you have a reimbursable expense to the PGP claims department.  Out of the account your employer has set up for you, we reimburse you the claim expense, up to the amount you have in your account. 

In essence, your employer is helping you pay for your out-of-pocket expenses that relate to your health insurance coverage. 

Key features of an HRA

• Reimburses your out-of-pocket medical expenses; this varies based on plan design
• Ordering rules apply when an HRA is paired with an FSA; this determines which account pays first
• Plan design may permit you to spend down accounts if you were to terminate employment or retire
• You may not contribute to the HRA; the HRA must be paid for solely by the employer
• Cash-outs are not permissible
• Expenses incurred while you are a participant may be submitted for reimbursement at any time while still a participant (your employer may impose more restrictive timing rules)

Tax advantages of HRAs

• Contributions from your employer are excludable from your taxable income; not subject to income or employment tax withholding
• Reimbursements for qualified medical expenses are tax-free (nonmedical reimbursements are not permitted)