An HRA is an account funded by the Employer in order to reimburse employees for certain medical care expenses which are incurred by the employees and/or dependents. An HRA must be funded solely by the Employer. The Employer may also allow any monies that are not used to reimburse an employee during a Plan Year to be carried over to the next Plan Year. This is an optional provision and not required. An Employer may also choose to allow monies not used during a plan year to be forfeited back to the Employer.
HRA’s can reimburse for substantiated medical expenses as described in Code Section 213(d) that have not been reimbursed by any other means. What an HRA reimburses is determined by Plan Design. For example: Employer A may decide to implement an HRA that only reimburses for the Deductible Expenses incurred by Employees while Employer B may decide to reimburse for all Section 213(d) expenses. The document will be written to give a detailed description of what the Employer has decided to reimburse.
For more detailed information regarding HRA plans, please contact our office.