An HRA is part of your employee benefit plan. Your employer contributes money each year to help you pay for eligible healthcare products and services for you and your dependents not covered by any other source.
An HRA is a reimbursement account set up and funded by your employer to cover eligible healthcare expenses. Unlike a healthcare FSA where the IRS defines the eligible services, the employer defines the services eligible for reimbursement from an HRA. Typically, an employer will reimburse healthcare services like doctor’s office visits and hospital services, and prescription drugs. For details on qualified expenses for your plan, check your summary plan document. Your employer will provide you with this document which details the rules of coverage.
Employers offer an HRA in conjunction with your health insurance plan in order to help offset your out-of-pocket responsibility. Your health insurance plan may require you to pay out of your own pocket in the form of copayments and/or a deductible before your insurance plan starts paying for services. Also, once you meet your deductible, you may need to pay a percentage (‘coinsurance’) of services until you meet your out-of-pocket maximum. An HRA helps offset your deductible and coinsurance responsibility by allowing you to pay for those costs from funds set aside by your employer. The funds your employer contributes are not included in your salary and are not considered taxable income.
With the HSAccess Card, pay with your card and qualified purchases will be automatically debited from your HRA. Some HRAs offer automatic payment of your responsibility. If your plan offers this service, your out-of-pocket expenses will automatically be paid from your HRA. Again, refer to your summary plan document to see if this service is available to you. Otherwise, you will be required to pay for the medical service upfront and then submit for reimbursement.