Health Reimbursement Arrangement

Health reimbursement arrangements (HRAs) are tax-advantaged accounts that are funded with employer dollars to pay employee expenses not covered by their health plan. The employer outlines what expenses will be covered in the HRA summary plan document within the limitations outlined by the Internal Revenue Service Publication 969. For example, an HRA could pay all eligible medical expenses, or the HRA could be limited to cover only dental or vision expenses. Although an HRA can have an option to carry forward unused funds to the future or for retirement, an employee cannot take their HRA funds to a new employer. HRAs can vary greatly in design, but are developed basically for the same purpose; to reimburse employees tax-free for expenses not covered by the employer’s health plan.

On average employers save over 20% on their overall healthcare costs while maintaining benefits and containing costs. OCA’s HRA utilization last year was just under 30%. The industry average is just over 40% HRA utilization. We believe this is due to our investment to employee education and compliant administration! Typically, an employer creates a notional (unfunded) arrangement for each participating employee, which OCA then uses to reimburse the employee for substantiated, qualified healthcare expenses. Unlike an HSA, employers will only have to fund for valid claims incurred. The rest of the money never leaves the employers bank account! It’s a win/win!