Health Reimbursement Arrangements (HRAs)

An HRA is a notational account funded by an employer for the benefit of an employee. Funds contributed to the HRA are deductible by the employer and tax-exempt to the employee. Unused funds can be rolled over by the employee for use in subsequent years.

Benefits of this approach to employers include:

• Funds are held by the employer.
  
  
• Employers can limit carryover amounts and portability.
  
  
• An HRA provides greater flexibility in plan design.
  
  
• Third-party claims adjudication assures appropriate use of funds.
  
  
• Employers can limit the HRA to services covered under traditional health plans.