Health Reimbursement Arrangement (HRA) can be the solution to the rising costs of major medical insurance. An HRA is a Federally approved program which makes provisions for employers to set up accounts for their employees to allow reimbursements for their eligible out-of-pocket medical expenses.
The distinct value of the HRA is that it allows employers to make changes to their health plan benefits that can cap or reduce annual premiums. At the same time, the HRA gives employers a mechanism for offsetting increased deductibles or cost-sharing that results from the benefit charges. Employers can establish and fund an HRA from which their employees can draw funds to pay their qualified out-of-pocket healthcare expenses, as defined under 213(d) of IRS Code. Reimbursements are tax free but must be made for qualified health care expenses. HRAs allow employees to roll-over any unused balances at the end of the year according to the Plan Design. This is very beneficial since employees will not lose their money if they do not spend it by the end of the year.
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Always consult with your tax or legal advisor with any questions about tax or legal matters. Additional information about Section 105 Plans and HRAs can be found in Section 213(d) of the Internal Revenue Code. Visit the IRS Website at www.irs.gov. The HRA program described herein is not an insurance benefit.