There are many ways to save and get assistance for healthcare expenses. With the cost of medical care being so high, you can use all the help you can get! While many opt to open health savings accounts (HSAs) or get a flexible savings account (FSA) through their employer, another option exists.
A health reimbursement arrangement (HRA) is a unique alternative that could provide substantial assistance. But how does it work, and what medical services will it cover?
What is an HRA?
An HRA is an employer-funded benefit that many companies offer as part of compensation plans. It is not an account. Many confuse HRAs with HSAs, but they are very different. With an HRA, you are not contributing money. As a result, you can't withdraw funds. In most cases, you must have the expense first, pay it yourself and request reimbursement later. Some employers have HRA debit cards for time-of-service coverage, but many do after-the-fact reimbursement. If you would like to know - What is an HRA? visit this website.
What is an HRA, and how does it work?
Essentially, your employer sets up the arrangement and determines how much it will put into the plan. They fund the arrangement, and you request reimbursement up to the set limits. Employers choose to offer this benefit for many reasons. It is an attractive benefit to get talent in the doors, and employers can also claim tax deductions for all reimbursements made through the HRA.
What Medical Services Does an HRA Cover?
Here's where most of the confusion about using an HRA stems. With an HSA or FSA, you have a clear list from the IRS about what constitutes a qualified medical expense. It's cut and dry, and you always know how much you have in your account to use.
With an HRA, your employer dictates what the HRA will cover and how much reimbursement it provides. IRS rules determine what qualified medical and dental expenses are allowed. However, your employer can exclude certain costs. These details must be clear on HRA documents for employees.
The good news is that there's ample flexibility. Sometimes, an HRA will also cover insurance premiums and expenses that other plans do not cover.
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