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HRAs go by many names, such as personal care accounts, or consumer-driven health plans. Whatever you call them, HRAs allow an employer to fund an account to pay employees’ healthcare expenses that are not covered by insurance.
An Empower HRA account may pay any or all of the same expenses as a Section 125 Health Flexible Spending Account (FSA). Unlike an FSA, only employers can make contributions to an HRA.
What Benefits Can an Employer Include in an HRA Plan?
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Expenses not covered by health insurance. Typical expenses include insurance co-pays and deductibles, medical exams, vision expenses, dental care, mental healthcare, chiropractic services, and prescription drugs. Over-the-counter drugs that are medically necessary, like allergy medications or aspirin, may also be paid through your plan. You may also limit the types of expenses paid through the plan. For example, your plan can exclude big-ticket items like orthodontia and LASIK eye surgery. |
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Insurance premiums. Health insurance provided by the employer, individually owned policy premiums, or long-term care insurance premiums may be paid from an Empower HRA plan. |
What Happens to the Money that an Employer Puts Into the HRA?
Once you establish an HRA, the plan pays for eligible expenses incurred by participants. Unlike an FSA, there is no requirement that the entire annual allocation be available on the first day of the plan year. HRA funds can be made available all at once or in equal portions throughout the year. It’s your option. This means no surprises and no big hits to your checkbook.
You can even allow employees to carry over unused dollars to the next year, or have unused balances forfeited at the end of each year.
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