Health Reimbursement Arrangement
Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses, up to a fixed dollar amount per year. Employers can utilize an HRA to address and offset deductibles and the rising costs of healthcare.
Download a printable summary of the HRA to learn more about this tax-free benefit:
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The HRA can be used concurrently with other tax-deferred accounts, such as FSA. See deferral limits thor those plans below.
Answers to your questions
Questions? We have answers! Here are your most frequent HRA questions.
Q: What is an HRA?
A: A health reimbursement arrangement (HRA) is a health plan that the employer owns and contributes to for the benefit of employees. HRAs are 100% employer-funded and represent an employer’s commitment to pay for certain health care expenses or offset a portion of the deductible for employees.
If the employer chooses, employees’ dependents may also be covered.
Q: How do I file a claim and get reimbursed?
A: Once an employee reaches the threshold for HRA claims, they will complete a claim form and submit it with the health plan's explanation of benefits (EOB) to the HRA administrator.
- Email: claims@americanbenefitadministrators.com
- Fax: (866) 734-4777
- Address: PO Box 380844 Birmingham, AL 35238
Q: How does an HRA work?
A: Businesses can utilize HRAs in conjunction with a high-deductible health plan (HDHP) to control health care costs. The savings fund a portion of the employee’s deductible.
Employer reimbursements for qualified expenses are tax deductible for the employer and tax exempt for employees. Employers decide how to structure the plan, including:
- How much to reimburse employees and in what order
- When to reimburse – monthly, quarterly, or annually
- Funding limits based on the account balance
- What to reimburse – deductible, or other qualified expenses
- If funds will rollover to the next health plan year
- Who to cover – employee only or also dependents
Q: What are the eligibility rules?
A: Almost all employees can participate in an HRA, as long as they meet the IRS Section 152 definitions. “S” Corporation shareholders above the 2% ownership level and their immediate family members may not participate but may sponsor a plan for employees.
LLC, LLP, Partnership, and Sole Proprietors may not participate but may sponsor a plan for employees. If the spouse is a bonafide employee of the company, they may participate and use the benefit for the entire family.
Once the HRA plan is set up, the HRA administrator provides employees with details on the specific plan, account information, reimbursement amounts and rules, and tips to get the most benefit from the account.
The administrator pays medical bills when employees submit them and pays the provider directly or reimburses the employee quickly based on the employee’s preferred method, such as direct deposit or mailed check.
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Questions?
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- From your Elevate by Nextep account, visit the Help tab.
- Call 888-811-5150.
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