This is not a use it or loss it type of plan like the FSA.

What is a Health Reimbursement Arrangement (HRA)? An HRA is an account funded by employers to REIMBURSE employees for healthcare expenses that ARE NOT covered by an insurance plan (A BARGINING CHIP). An HRA account can be used to reimburse employees for specific expenses or as many expenses as are allowed under a Flexible Spending Account (see FSA). Only employers can make contributions to an HRA. 

Types of HRA'S: Bridge, Comprehensive, Limited and Insurance Only.

What are the benefits of an HRA? For the employer: Increases potential out-of-pocket scenarios (i.e. co-pays, deductibles and coinsurance) and lowers fixed insurance premiums costs. Employers can limit eligible expenses to specific scenarios (i.e. in-network deductible only). Unused monies return to the employer at the end of each plan year. Employer holds all the money until expenses are actually incurred, in most instances.  Employer obtains 100 % tax deduction on any distributed monies.

What happens to the funds an employer puts into an HRA? For the employer:  Once the plan is established it pays for eligible expenses incurred by participants. Funds can become available all at once or in equal portions throughout the plan year allowing the employer to budget for when payments will be made to employees. The employer can choose to allow employees to roll unused amounts into the next plan year or retain the money within the company.

What are the benefits of an HRA For the employee?:      Reimbursement money comes only from the employer. Reimbursements available by check, direct deposit or debit card (*for an additional fee).  No financial commitment on the part of the employee. Employee does not pay tax on any reimbursements, nor are there any reporting requirements on personal tax returns.

Please contact this office to review the additional benefits and fees that are obtained with a debit card. One example of an additional benefit is the deduction for transit and/or parking.

The following information is basically the same concept as provided above , just worded differently to aid you in having a better understanding. These drop downs will provide you with a detailed list of inclusions and exclusions for the HRA.  Please read on!

From Wikipedia, The Free Encyclopedia

The Employer selects a (HDHP - OPTIONAL), high deductible health plan that dramatically reduces the company's premium for their health insurance. Then the money from the reduced premium is deposited into an account controlled and managed by the employer. As far as the employee is concerned nothing has changed. The employer can keep the same benefits for the employee or choose a different health plan. (please note that you the employer want to have a stop loss feature - this can be obtained by offering an in-network plan with a relatively low deductible and with a very high out of network deductible).  The employee is unaware of the management's ability to save money for the employer. 

The employer credits the employees' account with credits, not money. This is a bookkeeping entry only. The credits are used only when actual expenses occur. Such as the employee going to their Doctor. Then the expenses of a test if the doctor orders a test. The employee has the same deductible - the in-network deductible, co-insurance, etc..

Employer contributions are Mandatory/Required. Who owns it "Portable": The health plan credits a portion of the premium to the HRA. Some plans may credit the annual amount at the beginning of the year. Individual contributions are not allowed. This simply means that the funds paid by the employer are not portable by employees!

Employee contributions are Not Allowed! Yet employees "can pay for part of the premium". This is why the funds are at the employer's discretion only. The employees' moneys can be used to offset the employer paying the entire cost of the premium. Yet for the employee all claim reimbursements are tax-free.  It is the employers choice to fund or not to fund the HRA. It's only mandatory when claims need to be paid.

Employer Tax Savings are Business Expense deduction for payments. Following World War II, American companies found health insurance to be a tax-efficient way of compensating employees.

Fast forward to today, as health costs spiral upward, both companies and individuals are beginning to look for alternatives. A reason cited by some analysts to at least partially explain the rapid rise in health costs is that consumers, who have their medical expenses paid to a large extent by insurance, have no motivation to control costs.

The best understanding might be gained through an appointment. A representative will be able to bring to light, if an HRA is the right plan for your company. Then if so, which type of HRA is the perfect fit for your firm.

IN ADDITION:

The health plans credits must be used while the member is covered by that plan. Unused credits are FORFEITED if the member terminates employment, (other than retirement) or changes health plans. Unused credits carry over year to year as long as the member remains in the sponsoring health plan.

HRA - Benefits:

Can be installed in your company IF you are a:

You will be supplied with all plan documentation.

Note: You must have established an HRA before incurring any tax deductible expenses  or the expenses will not qualify.

From Wikipedia, The Free Encyclopedia

Health Reimbursement Accounts are also called Health Reimbursement Arrangements (HRAs). HRAs are partially self-funded medical insurance plans with special tax advantages. (See IRS Publication 969: [1]) Partially self-funded means the employer pays a predetermined portion of medical claims up to a cap. After the cap is reached, the plan picks up the slack and pays an amount equal to its portion of the co-insurance. The patient continues to pay a percentage of claims until the out of pocket maximum, or "stop-loss amount" is reached. The plan then pays 100% of medical claims up until the end of the benefit period. Benefit periods either run on a calendar year or a benefit year, that is, one year from the date the policy becomes active.

To the insured, the policy "looks" like a traditional medical insurance plan. Physician co-pays, drug card co-pays, and deductible and co-insurance generally apply. (All insurance policies are unique; it is likely that only some of these elements may apply.) The employees of companies with HRAs feel no difference from the plan design.

Health Reimbursement Accounts are only funded by the employers and can be deducted as business expense when actual distributions are made. An employee may only qualify for funds from an HRA while employed by the employer and subject to the terms of the governing plan document. The employer may cancel or amend a Health Reimbursement Account at any time.

Health Reimbursement Accounts differ from Health Savings Accounts (HSAs) in that no separate savings account is involved. Although both plan designs are considered "consumer driven health care," HRAs resemble traditional plans, while HSAs are designed to place the responsibility of the cost of health care on the insured.

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