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How HRA’s can help you save in health insurance costs?

Health Reimbursement Arrangement or HRA is a government based program which can help in reducing the constantly rising health insurance costs. HRAs are offered as a part of consumer directed health plans (CDHP) which can help in reducing the cost without compromising on the coverage aspect.

Features of HRA

The following are the features which has made the idea of HRA so popular.

• HRA is an employer funded account which would contain the employer’s contribution towards employees’ health benefits. The charges of healthcare would be paid from this account on qualified medical expenses.
• HRA plans have helped in spreading awareness amongst the consumers and thus have reduces over utilisation of health insurance.
• The amount in a HRA account can be rolled over to next year if the member doesn’t use entire fund available to him. Therefore, the money in the HRA account can grow tax deferred.
• The HRA account is free from state, federal and FICA taxes.
• The health reimbursement arrangement has also improved the quality of healthcare rendered to the members since preventive care, immunization and child care benefits are normally covered on the first dollar basis and are not charged against the employee’s fund.

How does HRA function?

HRAs are associated with high deductible health plans. The employers can save on the premium by raising the deductible level. The saving therefore can be directed to the HRA accounts.

The employer contributes a pre determined amount towards the HRA account on a regular basis which the employee can access upon submitting a reimbursement request. The following two documents should accompany your claim.

• The HRA reimbursement form
• Explanation of benefit form, copies of the receipts of the services rendered.