What are the benefits of having these plans?

Health Reimbursement Arrangements (HRAs) are designed to help employers who want to continue to offer a high level of benefits to their employees, while containing their health plan costs.

The employer provides a core level benefit plan with a high deductible and offers additional benefits through an HRA. The HRA creates a health reimbursement fund, enabling the employer to reimburse a portion of the employee's out-of-pocket expenses (i.e. deductibles, copays and coinsurance), in exchange for much lower base plan costs. Any unused HRA funds remain the employer's.

An HRA plan is paid solely by the employer and not funded through salary reduction elections of the employees. The employer determines the maximum health reimbursement amount per employee. Under the HRA plan, the employer reimburses the employee for qualified out-of-pocket health care expenses up to the maximum dollar amount established by the employer for the coverage period.

How does it work?

The employer has the ability to create a flexible plan design that includes a core health plan with a high deductible in exchange for a lower health care premium.

The employer will determine the annual amount they will reimburse towards out-of-pocket expenses (i.e. deductibles, copays and coinsurance). The employer will determine the maximum amount reimbursed for each coverage type (i.e. single employee, employee & child(ren), employee & spouse/domestic partner and employee with family coverage).

Employees utilize the core plan benefits and experience out-of-pocket expenses. These expenses can be submitted to the employer's HRA plan for reimbursement up to the HRA fund maximum based on their coverage type (i.e. single, family, etc.).

Any HRA funds not reimbursed to employees are retained by the employer.