A health reimbursement account (HRA) is an excellent way to manage healthcare expenses. It’s a cost-saving tool offered by employers and functions similarly to other health savings accounts.
If you’re interested in enrolling in a health reimbursement account, there are many things to consider. The biggest question should be about what the plan considers an eligible expense.
Health Reimbursement Account Basics
These accounts can help you cover unexpected healthcare expenses. But instead of putting money into a traditional health savings account, the health reimbursement account will pay you back for what you already spent. Typically, the funds used to cover reimbursement are tax-free, making it an excellent cost-saving measure for you and your employer.
The process is relatively straightforward. After enrolling, your employer funds the account. You then receive a monthly allowance. After paying for expenses, you submit a claim, and the account will reimburse you up to the monthly budget.
However, before reimbursement happens, you must provide documentation to prove it’s an eligible expense. That begs the question: What expenses are eligible for reimbursement?
Eligible Expenses
A health reimbursement account works a little differently than a standard HSA. Because it’s employer-funded, your company gets to decide which healthcare expenses the account will cover. That’s why it’s so important to familiarize yourself with plan documents. The exact details should be in the plan documents, making it easy to plan healthcare costs.
While employers can dictate the types of expenses a health reimbursement account covers, they don’t get to determine what’s eligible and what’s not. Companies must choose from a list of qualified expenses approved by the IRS. The list of expenses is subject to change but generally consists of anything deemed medically necessary.
That includes doctor’s visits, dental examinations, pharmacy expenses, etc. Your employer can choose the level of coverage the reimbursement account provides, but they cannot deem an IRS-approved expense is ineligible.
An HRA has a lot to offer and can be the right choice for many individuals. But before you enroll, study the documentation and learn about coverage to ensure that you’ll get reimbursed for the services that matter most to you.
Author Resource:-
Daniel Stewart has been helping people with their money management and personal finance with over 15 years’ experience in business finance. You can find his thoughts at savings guide blog.
