Health Reimbursement Arrangements

From SmartMedicalConsumer Wiki

From the IRS publication 969 (2007) "Health Savings Accounts and Other Tax-Favored Health Plans"

A health reimbursement arrangement (HRA) must be funded solely by an employer. The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee. Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period. An HRA may be offered with other health plans, including FSAs.

For information on the interaction between an HRA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier.

[edit] What are the benefits of an HRA?

You may enjoy several benefits from having an HRA.

• Contributions made by your employer can be excluded from your gross income.

• Reimbursements may be tax free if you pay qualified medical expenses. See Qualified medical expenses, later.

• Any unused amounts in the HRA can be carried forward for reimbursements in later years.

[edit] Qualifying for an HRA

HRAs are employer-established benefit plans. These may be offered in conjunction with other employer-provided health benefits. Employers have complete flexibility to offer various combinations of benefits in designing their plan. You do not have to be covered under any other health care plan to participate.

Self-employed persons are not eligible for an HRA.