HRAs – Health Reimbursement Accounts

An option you have for funding your employee health plan that benefits individuals, families, and those nearing retirement is a Health Reimbursement Account (HRA). This IRS-sanctioned plan offers tax-advantaged employer health benefits that reimburse employees for their out-of-pocket medical expenses and individual health insurance premiums.

How does an HRA work?

  • Employers set up an HRA for each participant with NV West
  • The HRA account is funded entirely by the employer, employees don’t contribute any money toward the HRA account.
  • Each plan year, employers contribute a specified amount into each participant HRA account. Available funds may be used for eligible HRA expenses.

Plans vary, and depending on your plan you may be able to roll over HRA dollars that aren’t used during a plan year. Your summary plan description will contain the specific details about your HRA, and your Nevada West Business Insurance Agent will explain all of the details with you to understand your options for providing employee benefits.

What expenses are covered under HRAs?

As only eligible expenses are reimbursed under your HRA plan it is important to understand what these expenses cover. The expenses defined by the IRS and encompass those expenses that you pay for out of your pocket for medical care that is provided to you, your spouse, or your eligible dependent. IRS rules state in general that medical care includes items and services that are meant to diagnose, cure, mitigate, treat or prevent medical illness or diseases. Transportation primary to receive medical care is also included. For instance:

  • The amount employees pay out-of-pocket for health plan deductibles
  • The amount that you pay out-of-pocket for doctor’s office visits
  • Cost of prescription drugs
  • Cost for eligible dental exams, x-rays and cleanings
  • Eligible vision care costs such as exams, eyeglasses, contact lenses and laser eye surgery

Other Noteworthy IRS Rules

Insurance premiums are allowed as eligible expenses under some HRA plans. Refer to your Nevada West Business Insurance agent for more information, or your summary plan description for details.

Reimbursement double-dipping, where reimbursed funds under your HRA cannot be reimbursed under any other plan or program. Only your out-of-pocket health care expenses are eligible for reimbursement. Also, reimbursed expenses can not be deducted when employees file tax returns.

Your Nevada West Business Insurance agent is an expert in health reimbursement accounts and can explain the benefits and features. Contact us to speak with a knowledgeable HRA agent.

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