Health Reimbursement Arrangements
Internal Revenue Code Section 105(h) Health Reimbursement Accounts (HRAs) can be added to any employee benefit plan without changing the existing benefits. These plans allow employees to use employer contributions to pay for certain non-covered medical, dental and vision care expenses including deductibles and coinsurance. The employer determines what expenses will be eligible for reimbursement and an annual amount to be deposited into each participant's account. Available funds may be allocated as a lump sum at the beginning of the year or be deposited on a monthly or per pay basis. Then, as expenses are incurred throughout the year employees may withdraw funds up to the amount available in their account to pay for eligible expenses. Your plan may include tax-free reimbursement of:
- Deductible - Employers may incorporate an HRA plan deductible that must be satisfied by plan participants prior to receiving benefits under the plan.
- Co-Payment- Employers may offer reimbursement of all expenses or of a certain expense such as office visits after participants satisfy a specific co-payment amount such as $10, $15 or $20 dollars.
- Co-Insurance- Employers may limit reimbursement to a percentage such as 90%, 80% or 75% of all eligible expenses up to a specific annual plan maximum.
- Rollover- Employers may elect to have unused funds accumulate and rollover from year to year.
Employers can customize their benefit plan by choosing any combination of these HRA plan components to best meet their needs. All plans are designed for full compliance with IRC Section 105 regulations.