Health Reimbursement Account (HRA)
For those unable to participate/contribute to an HSA, an HRA may be an option for you. HRAs are designed to operate with a High Deductible Health Plan (HDHP), thereby reducing premium costs while encouraging employees to spend wisely. You may enjoy several benefits from having an HRA:
- FREE contributions from the company.
- Contributions can be excluded from your gross income.
- Reimbursements may be tax-free if used to pay for qualified medical expenses.
- Any unused amounts in the HRA can be carried forward for reimbursements in later years.
An HRA is limited to:
- Employer-only contributions to assist in paying out-of-pocket expenses under the HDHP.
- Employees may not contribute.
- The account is not portable. If you leave the company, you forfeit funds in the account.
An HRA may reimburse medical care expenses only if they are incurred by employees, their spouse, and tax dependents. HRA coverage must be in effect at the time the expense is incurred.