How does an HRA work?If you’re new to offering an HRA through an administration software platform, we can help. At PeopleKeep, we’re experts on HRA administration and help thousands of employers reimburse their employees every day. Show
Step 1: Design your benefitFirst, employers design their HRA benefit so it’s uniquely suited to the needs of their employees. When setting up your HRA, you’ll decide how much tax-free money you want to offer to employees each month, which expenses you’d like to be eligible for reimbursement, and, depending on the type of HRA you’re offering, potentially decide if you’d like to offer different benefits to employees in different groups. Step 2: Employees make healthcare purchasesOnce your benefit is set up, employees are ready to spend their allowance. Employees offered a QSEHRA or ICHRA will purchase the qualifying medical expenses and healthcare services they want with their own money. Employees offered a group coverage HRA—also known as an integrated HRA—can use their allowances to help cover expenses subject to their deductible. Eligible expenses can include everything listed under IRS Publication 502, although you can limit some of these items according to your preference. For example, if you want to offer a premium-only QSEHRA that only reimburses employees for their individual health insurance premiums, not out-of-pocket costs, you can do so. Keep in mind that if you’re offering an HRA that’s integrated with your group health insurance plan, then employees will only be able to use their allowance for out-of-pocket expenses, not insurance premiums. Step 3: Employees submit proof of incurred expensesNext, after employees have made their purchases, they’ll submit documentation showing proof of the incurred expenses they’re submitting for reimbursement. This documentation must include:
Invoices, receipts, or an explanation of benefits from an insurer or healthcare provider typically satisfies this requirement. Depending on the item that’s being requested for reimbursement, a doctor’s note or prescription may also be necessary. Keep in mind that this information is subject to HIPAA’s privacy rules and must be handled carefully if you are self-administering an HRA. Step 4: Review and reimburse expensesFinally, employers will review the expense and either approve or reject the request. If you’re offering an HRA with PeopleKeep, our experts will review your employees’ submissions for you so you can be sure it qualifies. If it’s a qualified expense, you will reimburse your employee up to their accrued allowance. Typically, employers choose to reimburse employees through payroll by adding a non-taxable line item to employees’ paychecks, although you can also pay out HRA funds through a separate check, cash, or a bank transfer. Health Reimbursement Arrangements: How an HRA WorksAlicia Main2021-07-01T12:14:11-04:00 What is a Health Reimbursement Arrangement?Health Reimbursement Arrangements (HRA) are a tax-advantaged account funded by your employer to cover your health care costs. The money contributed to this health reimbursement arrangements are not taxed, and you can access these funds to pay for any qualified medical expense for you or your dependents. Only your employer can contribute to health reimbursement arrangements; no employee contributions are allowed. Paying for health care is both easier and less expensive with an HRA plan from Optum Financial.  Optum Financial HRAs have many benefits, including:
Health Reimbursement Arrangements Questions AnsweredWhat can I use my HRA funds for?There are hundreds of eligible expenses for tax-free purchase with your account funds, including prescriptions, doctor’s office copays, health insurance deductibles, and coinsurance. Many over-the-counter (OTC) treatments are also eligible, though keep in mind that many require a prescription, letter of medical necessity, or doctor’s directive.* View the HRA eligible expenses list Where can I shop with my HRA funds?You can use your HRA card at approved merchants. Your card has been programmed to work only at merchant locations that are designated as health care merchants based on their Merchant Category Code (MCC). Examples of qualified merchants include doctor’s offices and hospitals. The card should only be used to pay for eligible medical expenses, and you should always save your receipts. You will not be able to use your payment card at locations that are not approved health care merchants. For qualified purchases at locations that are not approved health care merchants, you can pay with other means, then submit a request for reimbursement through your online account. Visit the CYC Marketplace page to learn more about approved merchants. Do I need to keep my receipts when I use my HRA payment card?Yes! The IRS requires that all HRA purchases be verified as eligible expenses. Sometimes purchases are automatically verified when you use your card. Other times you will need to provide an itemized receipt or other supporting documentation to comply with IRS guidelines. Therefore, always hold on to your receipts in case further documentation is requested. Receipts must contain the date of service, name and address of service provider/merchant, description of the service or expense provided, amount charged, and name of person receiving care or service. Non-itemized cash register tapes, credit card receipts, and cancelled checks alone unfortunately do not provide proper substantiation. This guide does not constitute tax advice. For more assistance, please contact your tax advisor. You can also find more information in IRS Publication 969 at https://www.irs.gov/pub/irs-pdf/p969.pdf. Please keep in mind that your state might have different tax rules. Always refer to your state’s tax guidance regarding HRA taxation. Using Your Heath Reimbursement ArrangementWe make it easy to access and use your health reimbursement arrangement funds. There are two ways to pay for health care. Use Your Payment CardProvide your card to a qualified merchant or provider, and they will swipe your card like any other credit or debit card to pay for your purchase. Self Pay and Get ReimbursedPay using your own personal credit card, cash, or check and keep your itemized receipt as documentation. Then, log on to your online account to file for reimbursement and upload documentation. You can receive reimbursement funds via check or direct deposit. Tip: Set up direct deposit online to receive quicker reimbursements. Learn More About the CYC Payment Card
Resources & ToolsAppDownload the AppManage claims on the go with the mobile app — available in iTunes and Google Play PortalManage Your AccountTake control of all your Optum Financial benefits with the easy-to-use online portal Customer ServiceGet Help 24/7Based in Florida, our customer care experts are ready to help resolve any issue, any time FAQsGet AnswersThere’s a lot to know about HRAs, which is why we’ve put together these FAQs Eligible ExpensesFind HRA-Eligible ItemsCheck out the eligible expenses list to see how you can save with an HRA BlogGet HRA InsightsOur blog, Connections, is the perfect place to find helpful benefits articles Our Latest ResourcesOur Latest Blog Posts
Building Harmonious Partnerships with the Help of Health Reimbursement ArrangementsBy Alicia Main|March 26th, 2021| A healthy partnership is not just between two organizations with similar goals who mutually benefit—but a relationship between employer and employee. When it comes to maintaining this relationship, one of the keys to a harmonious partnership revolves around the benefits the employer provides the employee. This article explores how HRAs can make for a healthier, happier union between employer and employee. New Year, New Learning Styles: Benefits Resources for All Types of LearnersBy Sophia Kerschbaum|January 8th, 2021| To cater to every learner, Optum Financial works to create content that serves a range of needs. To start the new year, we reviewed some of the most common learning styles and the benefits education resources we’ve created for each. Use these to brush up on your own knowledge or share with clients and members to give them a better understanding of the benefits available to them. What is a disadvantage of a health reimbursement account?And here are the biggest disadvantages: You can't contribute to your own HRA, so you are reliant on your employer to put money in. Your employer owns the account, and you lose your HRA money if you leave your job unless you elect COBRA coverage. Money in an HRA cannot be invested and grow year-over-year.
Can I withdraw money from my HRA account?You can't cash out your HRA.
Unused HRA funds are either rolled over to be available for eligible expenses the following year or retained by your employer — and your employer can decide which of these options to allow. But you can never choose to withdrawal HRA money for unapproved use.
What can I spend my HRA on?HRA - You can use your HRA to pay for eligible medical, dental, or vision expenses for yourself or your dependents enrolled in the HRA. Your employer determines which health care expenses are eligible under your HRA.
What is HRA and how does it work?An HRA, or health reimbursement arrangement, is a kind of health spending account provided and owned by an employer. The money in it pays for qualified expenses, like medical, pharmacy, dental and vision, as determined by the employer.
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How does a health reimbursement account work
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