What is a ‘Health Reimbursement Account – HRA’
A health reimbursement account (HRA) consists of employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company’s standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free.
The downside to HRAs is that companies may choose whether to start or fund such a plan. Also, if a plan has already been established, the employer has the right to cancel it at virtually any time.
Explaining ‘Health Reimbursement Account – HRA’
As a benefit, an employee may be reimbursed for qualified medical expenses from his or her employer. The funds received are tax-free, but because the plan is employer funded, the employer has the right to cancel or alter the distributions at any time. In spite of this, many employees consider HRAs as a valuable benefit given the rising cost of health care.
Further Reading
- The effect of consumer-directed health plans on the use of preventive and chronic illness services – www.healthaffairs.org [PDF]
- Medical savings accounts: assessing their impact on efficiency, equity and financial protection in health care – www.cambridge.org [PDF]
- An assessment of high deductible health plans and affiliated savings accounts in the current market – www.tandfonline.com [PDF]
- Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs – webarchive.urban.org [PDF]
- … Views About Consumer-Driven Health Care: Results From A National Survey: Despite reservations among employers, enrollment in health reimbursement … – www.healthaffairs.org [PDF]
- Satori integrated health and financial benefits system and method – patents.google.com [PDF]
- Evolution and early evidence of the impact of consumer-driven health plans: from e-commerce venture to health savings accounts – www.tandfonline.com [PDF]
- Availability, Contributions, Account Balances, and Rollovers in Account-Based Health Plans – papers.ssrn.com [PDF]
