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What is a Health Reimbursement Arrangement?

A Health Reimbursement Arrangement is a tax favored employer funded arrangement that reimburses employers for certain qualified medical expenses or some allowable premiums. HRA’s are an effective and simple way for an employer to take control of employee health care benefit costs.

HRA’s are designed to work in conjunction with a high copay, high coinsurance or high deductible health plan offered by the employer. By increasing the benefit level of the plan the cost of the health insurance premium will decrease. This allows the employer to use the premium savings to fund the HRA account and establish a health plan that the employee is accustom to having.

With a Health Reimbursement Arrangement the employer determines the plan requirements.

• Who will pay health care expenses first (Employee or Employer)
• The maximum amount of annual reimbursements
• If the HRA dollars can be rolled over to the next year and the amount of the rollover.
• If they would like to pro-rate the reimbursements monthly. (Employers with extremely high deductibles may want to consider this option to avoid a cash flow issue if multiple claims are received for reimbursement at the same time)
• Specific classes with different benefit plans
• What benefits are to be reimbursed (dental, vision, medical or allowable premiums)


Retiree HRA Accounts

Providing Retirees Choices
In the past few years, the number of healthcare plans available within the individual Medicare market has sufficiently grown. Retirees now have a wide selection of Medicare supplemental plans to choose from and can customize coverage to meet their individual needs.
To leverage the many choices available, Employers are not providing group health plan coverage to Medicare-eligible retirees, and instead, contributing funds to a Health Reimbursement Arrangement (HRA) account that employees can use to offset the cost of the Medicare plan they choose.

An HRA is a tax-free account, set up by the Employer for the employee to reimburse for the following expenses:
• Insurance premiums;
• Premiums for Medicare Part B and Part D;
• Premiums for Medigap or Medicare Advantage Plans (Part C)
• Dental and vision plan premiums and eligible expenses; and
• Out-of-pocket expenses such as deductibles, co-pays and your share of coinsurance.

Funding for Your HRA

1. The employer will determine the HRA allowable amount per single and two party contract.
2. Your Compass Care Management Consultant will work together with the retirees to evaluate the coverage options and select the health care plan that is right for them.
3. The retiree will enroll in a plan through the Medicare Market starting October 18 through December 8 or open enrollment.
4. After enrollment, the employer will credit the HRA account either monthly or annually to fund the upcoming claim expenses.

Reimbursement from Your HRA

1. The employee will pay their monthly premium directly to the insurance carrier.
2. The employee will pay for all medical copays, deductibles and qualified medical expenses.
3. The employee will complete and submit a claim form to Compass Care Management LLC for their Medicare premium and all qualified medical claim expenses monthly for reimbursement.
4. Compass Care Management LLC will issue a check to the employee for the reimbursement or will direct deposit the funds into a checking or a savings account.

A Win for All

By removing your retiree population from your active group coverage you will be able to reduce your group health care cost and risk factors enabling you to gain some control on future costs. Retirees are very happy with the move to a HRA as their benefits stay the same or increase in many cases. They are usually able to save money in the process with a Medicare plan rate versus an active group rate.