Health Reimbursement Arrangements
A Health Reimbursement Arrangement is an Employer Funded plan whereby the employer promises to reimburse certain eligible medical expenses not covered by a major medical plan. A Health Reimbursement Arrangement can be designed to reimburse a variety of expenses including any out-of-pocket medical expense that meets the Internal Revenue Code Section 213 definition of medical care, such as co-pays, deductibles, and medical expenses that are not covered by your major medical plan.
The main reason to utilize a Health Reimbursement Arrangement is to allow you select a less costly medical insurance plan while protecting your employees from paying for large out of pocket expense amounts.
One of our clients with 97 employees saved over $840,000 by switching from a $10 co-pay plan to a high deductible plan and reimbursing all of the out of pocket expenses that were incurred by their employees through a Health Reimbursement Arrangement.
In order for employees to participate in a Health Reimbursement Arrangement, which reimburses medical expenses, employees must be a participant in a group medical plan. Plans which cover other than medical expense amounts can cover all employees.
We administer HRAs with many different plan designs. Some designs allow for the use of our debit card, whereas others require manual claims to be submitted for reimbursement. Where manual reimbursement is required, employees can receive a check or a direct deposit to his or her bank account.
Some of the plan designs that we administer reimburse the following:
For high deductible medical plans –
- The first portion of the deductible.
- The last portion of the deductible.
- The entire deductible.
- A percentage of out of pocket expenses.
For other medical plans
- Certain co-pay amounts
- A portion of co-pay amounts.
Your employees will need to spend some time paying for these out of pocket expenses and/or submitting claims for reimbursement. It is critical to select an HRA administrator who not only answers the phone, but also assists employees when they have questions. Otherwise, your employees will not be happy.
In order to determine whether a Health Reimbursement Arrangement will benefit you will need to work with a health insurance broker and an organization such as ours who has experience with these types of plans. If you need assistance finding a health insurance broker we can refer you to one who is an expert in consumer driven health plans.