It’s always nice to get some extra help – especially when it comes to health care costs. That’s why some employers offer health reimbursement arrangements (commonly called health reimbursement accounts or HRAs) to employees enrolled in their company’s health insurance plan.
HRAs hold money your employer sets aside exclusively for your health care expenses, like copays, lab fees, prescription medicines and more. Below, we’ll go through the details of HRAs and what makes them different from a health savings account (HSA) or a flexible spending account (FSA). We’ll also show you how you can use your HRA, including getting reimbursed for expenses and tracking your spending.
An HRA is a special account created and funded by your employer with money for you to use on eligible medical expenses. The funds that your employer provides for your HRA are distributed to you before taxes and aren’t reported as income.
Your employer sets the rules for your HRA: They decide which medical expenses are eligible, the amount of money you get each year and whether you can roll funds over from year to year. You also can’t add your own funds to an HRA and, if you leave the company, your employer generally keeps any unused money.
If an HRA sounds similar to a health savings account (HSA), flexible spending account (FSA), or lifestyle spending account (LSA), you’re spot on. But there are some important differences:
- A health savings account (HSA) is also an account that’s used specifically for health care costs. But unlike an HRA, an HSA is a bank account that you can only have if you’re enrolled in a high-deductible health plan (HDHP). Also, it’s primarily funded by the employee through regular pretax contributions, and the funds never expire – they travel with you if you leave your job.
- A flexible spending account (FSA) also holds pretax money for health care expenses, and different kinds of employer-offered FSAs can be paired with any kind of employer-sponsored health plan. But unlike HRAs, FSAs are funded primarily by the employee, not the employer. And while yearly rollover is possible with an HRA and HSA, the money in an FSA typically needs to be spent before the end of the year – think “use it or lose it” – with a few exceptions.
- Finally, a lifestyle savings account (LSA) contains money set aside by your employer for improving your physical, mental and financial well-being. Like an HRA, LSAs are funded entirely by your employer, and they decide what expenses are eligible. But while other accounts help cover health care expenses, an LSA complements your insurance coverage by offering funds for things that contribute to your well-being but aren’t health care.
How HRAs work
When you enroll in a health reimbursement account, a predetermined amount is added to the account by your employer. These funds are tax free and aren’t reported as income.
However, an HRA isn’t a bank account. That means you won’t be able to earn interest or use the balance to invest. Plus, you can’t deposit any of your own funds into the account. An HRA’s only purpose is to hold funds provided by your employer for you to spend on eligible health care expenses.
Your employer makes the ultimate decision on which medical expenses you can spend your HRA funds on. But typically, you can use your HRA for doctor visits, lab fees, chiropractor fees, prescriptions, home medical equipment and more. You can also often use money from your HRA for deductibles, coinsurance and copays.
We have a list of qualifying medical expenses (PDF) that will give you a good idea of what you can (and can’t) likely use your HRA funds for. If you’re a HealthPartners member, you can get details about your specific HRA’s eligible expenses by signing in to your online account.
Using an HRA debit card
Your HRA may come with a special debit card. This is the easiest way to use your HRA – just present the debit card at your provider’s office when paying for services, or use it to pay for eligible items at a store or online. The card takes the money directly from the account. Just save the receipt in case you’re asked to verify the transaction was for eligible items or services.
Submitting HRA claims
Some employers have an automatic submission process for HRAs when you use your employer-sponsored insurance at an in-network doctor or pharmacy. If that’s the case, claims are processed automatically with no action needed from you. Depending on how your HRA works, either your provider will be paid directly or you’ll be reimbursed for your out-of-pocket expenses (so long as there’s money available in your HRA).
For HRAs without automatic claims submission, or qualifying expenses where insurance wasn’t used, you can submit your claims manually. Usually, you can do this online or through an app – just fill out a form with details about your expenses and submit it along with a copy of your receipts. HealthPartners members can submit claims by signing in to their online account or with the HealthPartners mobile app for Android and iOS.
Reimbursement funds are sent directly to your bank account if you’ve signed up for direct deposit, or by check. Some HRAs may charge fees for check reimbursements.
Keeping track of your HRA
Most insurance companies give you access to your HRA through either an online account or mobile app. This way, you can keep track of withdrawals in real time and see where your money is going. HealthPartners members can see information about their HRA by signing in to their online account or using the HealthPartners mobile app for Android and iOS.
Do HRAs roll over? Your HRA balance at year-end and beyond
If you use up your entire HRA balance by the end of the year, you’ll need to pay for any additional health care expenses out of pocket until your employer adds more money to your HRA (likely at the beginning of the next year).
If you don’t use up your entire HRA balance by the end of the year, it’s up to your employer whether or not you can roll over the remainder to the next year. If you have an HRA balance as the end of the year approaches, check in with your employer about their HRA rollover policy – you may need to spend any unused funds before the year comes to a close.
If you leave your job, you won’t be able to take any remaining HRA funds with you. But if you decide to continue your employer-sponsored coverage through COBRA, you’ll still be able to use funds from your HRA until your COBRA coverage ends.
More answers and more help with HRAs
Have more questions? We have a handy list of answers to frequently asked questions about HRAs (PDF).
If you’re a HealthPartners member with an HRA, you can get more details about your plan by signing in to your online account. You can also look up HRA forms or call us at 866-443-9352.