HRAs, enabled through IRS Tax Code Section 105, are employer-sponsored accounts used to reimburse employees for eligible medical expenses. Health Reimbursement Accounts are generally offered in conjunction with a high-deductible health insurance policy. To cover all or part of the deductible, the employer then establishes and contributes to a tax-advantaged HRA for employees. The account does not need to be pre-funded and unused funds may be allowed to roll over year-to-year. Employees use the allocated tax-free dollars in the HRA to pay for healthcare expenses not covered under the high-deductible plan. Only the employer can contribute to an account; employees cannot participate in the contribution.
Advantages of ABC's HRA Plans
HRAs are available to all business sizes
Complete flexibility with employee retirement or termination
Unspent funds can rollover year to year, as decided by the employer
Employees are allowed to receive reimbursements tax-free
Established by an eligible individual or by an employer for an eligible employee, an HSA is used for paying qualified medical expenses. HSAs combine a savings account with a high-deductible health insurance plan, offering lower health insurance premiums with various tax advantages. Made possible through the Medicare Prescription Drug and Modernization Act, these Archer MSA-like accounts became available on January 1, 2004 for virtually anyone who has coverage under a high-deductible health plan (HDHP).