What is a health reimbursement account (HRA)?
A health reimbursement account or arrangement (HRA) is true to its name: Your employer funds the account so you can reimburse yourself for certain medical, dental or vision expenses. As an account-based health plan, an HRA can help you stretch the value of your health care dollar for eligible health care expenses and over-the-counter items.
How do HRAs work?
Your employer owns your HRA and sets it up for you. It’s a different arrangement than a flexible spending account or health savings account, when you contribute money.
- Your employer sets the rules and decides the amount. You are not allowed to make contributions to your HRA.
- Your employer decides the list of medical expenses that will be covered. Most employers set up HRAs for their employees to pay for expenses not typically paid for by health plans — medical and pharmacy expenses that may be paid out-of-pocket before meeting a deductible, as well as coinsurance after meeting a deductible.
- There can be tax advantages. Your reimbursement for eligible medical expenses is generally not considered taxable income. You usually receive the full amount, and don’t have to pay federal or state income taxes on the money.
- Use it or you might lose it. Your employer can set up the plan so that unused HRA funds roll over from year to year. This isn’t a requirement, though. If you leave your employer and have unused funds in your account, they can keep the money.
How can I use the money in my HRA? What can I buy?
You can use the funds in your HRA to pay for eligible medical expenses, as determined by the IRS and your employer. Some employers may only allow the HRA to pay for services covered by your health plan. Some employers may also let you use funds in the account to pay for dental, vision or other services. Some of the more common expenses that HRAs can help pay for include:
Monthly premium payments
Payments toward a deductible
Routine doctor’s visits
Blood pressure monitors
Vision care, including eyeglasses, contact lenses and exams
Over-the-counter medicine and drugs
Blood glucose monitors
How do I access my HRA money?
Your employer decides how you’ll access your HRA, but it will likely be one of the following methods:
- You won’t do anything — most plans will reimburse your network doctor directly
- You’ll use a debit card tied to the account, if offered by your employer
- You’ll pay for expenses up front, then request reimbursement
Compare HRAs to other health accounts
HRAs are different from Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA). Comparing the different types of accounts may help you understand better how to use these accounts to your benefit.
How do I enroll in an HRA?
You can enroll in an HRA, if offered by your employer, during your open enrollment period. Outside of open enrollment, you can sign up when you first join a company or if you experience a qualifying life event.
For more information and to learn if this account is available to you, contact your employer.
If you’ve experienced a qualifying life event, please call the number on your member ID card.