Health Reimbursement Account (HRA)
What Is A Health Reimbursement Account?
A Health Reimbursement Account (HRA), also known as a Health Reimbursement Arrangement, is an IRS-approved, tax-advantaged health benefit plan that is funded by employers. It serves as a way to reimburse people in the workforce for individual health insurance premiums. The use of a health reimbursement arrangement lets the employers make a steady flow to a workers account and give the necessary reimbursement for eligible costs. For you, as a worker, a health reimbursement plan would totally be a fantastic way to gain health coverage benefits.
How Do Health Reimbursement Accounts Work?
Essentially, HRA's are created by an employer, and the only person that can contribute to the HRA account is the employer. Then the employer must give a certain contribution annually. Once the funds are deposited, employees are then able to use those funds to pay for any expense that is covered by Health Reimbursement Accounts.
HRA Eligible Expenses
Each health reimbursement account has certain eligible expenses. The person or company that you're employed under will make the decision on which coverage plan they want you to have and that'll determine which health care expense you get to obtain as an employee. Here's a small list of some of the expenses that can be reimbursed:
- Acid controllers
- Acne laser treatment
- Adult diapers
- Alcoholism or Drug Abuse
- Allergy and sinus
- Artificial Limb
- Benefit Maximum
- Birth Control Pills and devices
- Birthing tub
- Blood pressure monitor
- Breast Pump, Shields, Gel Pads
Can You Use Your Health Reimbursement Account To Pay For Your Premiums?
Yes, if your employer gives employees a Health Reimbursement Account, then you can most definitely use the money in the account for your healthcare costs. Furthermore, if you have an HRA account set-up then one of the best features for account's is its use of funds to expel the costs of health insurance premiums.
Is An HRA Tax Deductible?
HRA tax benefits for employers are pretty good. All reimbursement plans are tax-deductible towards the business. To add on to that, the HRA tax benefits for employees is just fantastic! Health Reimbursement Accounts are 100% tax-free. The reimbursements eventually will subtract from the employees' gross income. This is extremely beneficial for both the employees and their very-own employers. Both employees and employers will save up to fifty percent in total taxes on the outrageous costs of healthcare expenses.
The Difference Between A Health Reimbursement Account And A Health Saving's Account
First off, the biggest difference between the two is that a Health Reimbursement Account is completely owned by an employer. On the other hand, a Health Savings Account (HSA) is completely owned by the employee. Another minor difference is how the two different types of accounts are funded. See, the money that's maintained in a Health Reimbursement Account is contributed solely by the employer. However, a Health Savings Account is a tax-advanced account that's used to pay for IRS-approved health care costs. In a Health Savings Account, anybody can add money to it, the employee can add money, the employer can, and even a family member can.
Health Reimbursement Plan Pros and Cons
The pros outweigh the cons of a Health Reimbursement Plan. The pros for employers in a health reimbursement arrangement include:
- Cost Control
- Tax-Advantaged Account
- Low Risk
- Recruitment Of Talent
The pros for employees in a Health Reimbursed Arrangement are things such as:
- Low Healthcare Expenses
- Healthcare Freedom
- No Effect On Income
- Tax-Free Reimbursement
However, there are cons that come along with a Health Reimbursement Plan. The cons of a health reimbursement arrangement include things like:
- No Portability
- No Standardization
- No Eligibility For Self-Employed
There are many things that come along with a Health Reimbursement Plan. However, which Health Reimbursement Arrangement do you feel is best?