It’s at all times nice to get some extra help – especially in terms of health care costs. That’s why some employers offer health reimbursement arrangements (commonly called health reimbursement accounts or HRAs) to employees enrolled of their company’s medical insurance plan.
HRAs hold money your employer sets aside exclusively on your health care expenses, like copays, lab fees, prescription medicines and more. Below, we’ll undergo the main points of HRAs and what makes them different from a health savings account (HSA) or a versatile spending account (FSA). We’ll also show you the way you should use your HRA, including getting reimbursed for expenses and tracking your spending.
An HRA is a special account created and funded by your employer with money so that you can use on eligible medical expenses. The funds that your employer provides on your HRA are distributed to you before taxes and aren’t reported as income.
Your employer sets the foundations on your HRA: They resolve which medical expenses are eligible, the amount of cash you get every year and whether you possibly can roll funds over from 12 months to 12 months. You furthermore may can’t add your personal funds to an HRA and, if you happen to leave the corporate, your employer generally keeps any unused money.
If an HRA sounds much like a health savings account (HSA) or a versatile spending account (FSA), you’re spot on. All three could be used to pay for health care expenses, but they’re different in terms of things like funding and rolling over funds every 12 months.
A health savings account (HSA) can be an account that’s used specifically for medical costs – doctor visits, medication, eyeglasses, and similar services. But unlike an HRA, an HSA is a checking account you can only have if you happen to’re enrolled in a high-deductible health plan (HDHP). Also, it’s primarily funded by the worker through regular pretax contributions, and the funds never expire, traveling with you if you happen to leave your job.
A flexible spending account (FSA) also holds pretax money for medical, dental or vision expenses. An employer-offered FSA could be paired with any type of employer-sponsored health plan, not only a high-deductible health plan. There are also special limited-purpose FSAs for dental and vision expenses, in addition to separate FSAs for dependent care and transportation.
Unlike HRAs, FSAs are funded primarily by the worker, not the employer. And while yearly rollover is feasible with an HRA and HSA, the cash in an FSA typically must be spent before the tip of the 12 months – think “use it or lose it” – with just a few exceptions.
How HRAs work
If you enroll in a health reimbursement account, a predetermined amount is added to the account by your employer. These funds are tax free and aren’t reported as income.
Nevertheless, an HRA isn’t a checking account. Meaning you won’t give you the chance to earn interest or use the balance to speculate. Plus, you possibly can’t deposit any of your personal funds into the account. An HRA’s only purpose is to carry funds provided by your employer so that you can spend on eligible health care expenses.
Your employer makes the last word decision on which medical expenses you possibly can spend your HRA funds on. But typically, you should use your HRA for doctor visits, lab fees, chiropractor fees, prescriptions, home medical equipment and more. You can too often use money out of your HRA for deductibles, coinsurance and copays.
We have now an inventory of qualifying medical expenses (PDF) that provides you with an excellent idea of what you possibly can (and might’t) likely use your HRA funds for. For those who’re a HealthPartners member, you possibly can get details about your specific HRA’s eligible expenses by signing in to your online account.
Using an HRA debit card
Your HRA may include a special debit card. That is the simplest approach to use your HRA – just present the debit card at your provider’s office when paying for services, or use it to pay for eligible items at a store or online. The cardboard takes the cash directly from the account. Just save the receipt in case you’re asked to confirm the transaction was for eligible items or services.
Submitting HRA claims
Some employers have an automatic submission process for HRAs while you use your employer-sponsored insurance at an in-network doctor or pharmacy. If that’s the case, claims are processed robotically with no motion needed from you. Depending on how your HRA works, either your provider can be paid directly otherwise you’ll be reimbursed on your out-of-pocket expenses (as long as there’s money available in your HRA).
For HRAs without automatic claims submission, or qualifying expenses where insurance wasn’t used, you possibly can submit your claims manually. Normally, you possibly can do that online or through an app – just fill out a form with details about your expenses and submit it together with a replica of your receipts. HealthPartners members can submit claims by signing in to their online account or with the myHP mobile app for Android and iOS.
Reimbursement funds are sent on to your checking account if you happen to’ve signed up for direct deposit, or by check. Some HRAs may charge fees for check reimbursements.
Keeping track of your HRA
Most insurance firms offer you access to your HRA through either an internet account or mobile app. This manner, you possibly can keep track of withdrawals in real time and see where your money goes. HealthPartners members can see details about their HRA by signing in to their online account or using the HealthPartners mobile app for Android and iOS.
Do HRAs roll over? Your HRA balance at year-end and beyond
For those who use up your entire HRA balance by the tip of the 12 months, you’ll must pay for any additional health care expenses out of pocket until your employer adds more cash to your HRA (likely in the beginning of the subsequent 12 months).
For those who don’t use up your entire HRA balance by the tip of the 12 months, it’s as much as your employer whether or not you possibly can roll over the rest to the subsequent 12 months. If you may have an HRA balance as the tip of the 12 months approaches, check in together with your employer about their HRA rollover policy – chances are you’ll must spend any unused funds before the 12 months involves a detailed.
For those who leave your job, you won’t give you the chance to take any remaining HRA funds with you. But if you happen to resolve to proceed your employer-sponsored coverage through COBRA, you’ll still give you the chance to make use of funds out of your HRA until your COBRA coverage ends.