Health Reimbursement Arrangement (HRA)
A Health Reimbursement Account (HRA) is a financial program that coincides with a group health insurance plan that reimburses employees for qualified medical expenses. The Department of the Treasury issued guidance on health reimbursement accounts in a revenue ruling in June 2002.
Eligible employees who elect with a Health Plan can participate in the Deductible benefits associated to their employer’s Health Plan. The Health Reimbursement Account Plan will help the employee pays the cost of the services that surrounds the Deductible. With the HRA, the employer will make a contribution into the Health Reimbursement Account (HRA). Participating employees may then request reimbursements or payments from their Health Reimbursement Account and their covered dependents’ eligible health care deductible service’s expenses. The maximum amount contributed from the employer to a participating employee and dependent(s) to their HRA will depend with the employer’s program. An employer can cover the full reimbursement (or, 100%) of the Deductible amount; other employer’s can establish a portion of the Deductible. If an employer’s HRA plan established an employer-contribution that is less than 100% of the Deductible, the employee will pay the balance between the employer’s contribution and the full Deductible amount. If you are an employee reading this information and need to know what your employer’s contribution to your HRA amount, refer to your employer’s Summary Plan Description (SPD) from your employer or ask your employer to send one to you.
If your employer is a DeHEY McANDREW client, call us and we will be happy to discuss your HRA amount.
As of beginning of the Plan Year, each participating employee will be eligible to receive the full HRA contribution for that Plan Year. When a participating employee or covered dependent(s) receives an Explanation of Benefits (EOB) or invoice (bill) from a medical provider associated with the employer’s medical plan’s Deductible, the employee (or dependent) can file a HRA claim any time through the Plan Year. The HRA will pay up to the Deductible limit described in your employer’s HRA Summary Plan Description (SPD). This Deductible amount is called the “Employer-funded Annual Health Reimbursement Account Contribution”.
Eligibility for Coverage
In general, full-time employees who eligible to his/her employer’s health/medical plan are eligible to participate in the HRA. To participate in the HRA Plan, the employee and any covered dependents must be eligible for coverage and enrolled in the Health Plan. For the purpose of the HRA Plan, eligible dependent(s), include any dependents who are enrolled with the employer’s health/medical plan as dependents are eligible with the HRA.
With DeHEY McANDREW’s HRA, enrollment in this plan is automatic upon an eligible employee’s enrollment in the health/medical plan and does not require a separate election or enrollment form. The health/medical plan is designated by the employer to include a health reimbursement account (HRA).
Changes in Status / Special Enrollment Periods / “Mid-year” Election Changes
Generally, an employee may add a dependent(s) or delete a dependent(s) from coverage only if a corresponding change is made to the employee’s coverage under the Health Plan. Changes to coverage under this HRA Plan will occur automatically when changes are made to the employee’s coverage under the Health Plan. The Plan Administrator may modify enrollment elections for administrative purposes or to comply with Plan legal requirements. Current Employees who are under a Cafeteria Benefits Plan are permitted to change their health plan elections after a new Plan Year has begun, but only in limited situations; namely, family or employment status changes.
Employer-funded Annual Health Reimbursement Account Contribution
For the Current Plan Year, the employer will cover an amount per participating employee associated to its benefit stated to the plan’s limits. As an example, an employer who has two optional health plans (PPO & HMO) could have a HRA Contribution arrangement as:
- Deductible is $1,000 (3 per family): Employer pays $1,000 for employees and covered individuals electing participation in the HMO option.
- Deducible is $2,000 in-network/$4,000$ out-of-network; Employer pays $1,500 for employees and covered individuals electing participation in the PPO option for in-network; $3,000 for employees and covered individuals for out-of-network coverage. If an individual requires both in-network and out-of-network coverage, the maximum amount of reimbursement is limited to $3,000 per plan year.
Actual amounts of Employer Contributions toward the HRA Deductible will vary based on an employer’s financial situation or collective agreement parameters with the health plan.
Health Reimbursement Account funds are available to participating employees to help off-set the annual deductible (and the deductible for covered family members) applicable under the Health Plan. Health Reimbursement Account funds are available to reimburse only those expenses incurred to pay the annual deductible under the Health Plan. Flexible Spending Account monies usages are not qualified for any reimbursements from an employer’s contributions toward the HRA.
Submitting a Claim for Reimbursement from the Health Reimbursement Account
Each employee will be entitled to receive, upon submitting a claim, reimbursement from the Claims Administrator for incurred expenses pertaining to the annual deductible under the Health Plan, up to the amount designated for the employee’s Health Reimbursement Account less any prior reimbursements. An employee may not “borrow” from his/her future anticipated HRA balance.
Participants must complete a claim form, mostly from the Employer’s Human Resources department or from the Claims Administrator (DeHEY McANDREW, LLC.) and submit it directly to the Claims Administrator, along with any required documents substantiating the claim, such as the Explanation of Benefits (E.O.B.) from the health insurer. The Claims Administrator will provide reimbursement to the participating employee for eligible expenses from the employee’s current Health Reimbursement Account balance. Reimbursement for eligible expenses will be sent directly to the participating employee, not to the employee’s health care provider or the health plan insurance provider, except in singular circumstances. If an employee receives an EOB and sends it to DeHEY McANDREW without paying the bill to the provider, DM can pay the claim to the provider. If the employee receives a reimbursement check from DeHEY McANDREW, but fails to pay the provider, such employee is liable for this failure.
All claims must be filed within three (3) months after the end of the Plan Year, or within three (3) months after coverage terminates under this Plan.
To receive reimbursement for eligible expenses, a properly completed and substantiated claim must be submitted by the Plan participant to the Plan’s Claims Administrator (DeHEY McANDREW, LLC.) no later than 90 days after the end of the Plan Year. As an example, if the Plan Year begins on June 1, an employee can place a HRA reimbursement claim by August 30. All claims must be submitted directly to the Claims Administrator (DeHEY McANDREW, LLC., P.O. Box 447, Scranton, PA 18501; tel (570) 346-9960; fax (570) 346-3411
Coordination of Benefits
This Plan will provide benefits solely for eligible expenses that are not reimbursed or reimbursable elsewhere, except as noted below. An employee may not be reimbursed for the same expense from both his/her Health Reimbursement Account and the Medical Expense Reimbursement Account.
If an employee participates in both a Medical Expense Reimbursement Account through the Flexible Spending Accounts Plan and a HRA Plan, reimbursement to the employee for his/her Deductible expense will be deem eligible under the HRA Plan, and/or eligible expenses of a covered dependent, will be provided first from any balance in the employee’s Health Reimbursement Account. If the participant does not have enough funds in the HRA to provide full reimbursement for his/her eligible expenses, the remaining amount which cannot be reimbursed from the participant’s HRA balance may then be submitted for reimbursement by the participant through his/her Medical Flexible Spending Account.
Termination of Coverage
An employee’s, spouse’s or dependent’s coverage under the Employer’s HRA Plan will terminate when the employee’s Health Plan terminates. Eligibility for participation in the Health Plan and HRA Plan terminates at the end of the calendar month in which: 1.) Employment termination occurs; 2.) An employee commences a leave of absence that does not provide continued benefits coverage; and/or 3.) an employee is no longer a member of his/her eligible employment classification.
Health Reimbursement Account Balance Upon Termination of Participation in the High Deductible Health Plan and this HRA Plan, an employee’s full Health Reimbursement Account balance will be forfeited by the employee, except as required by the IRS under “COBRA”. In this situation, if the terminated employee or an individual is affected in #2 or #3 in the previous paragraph and exercises COBRA, the individual and his/her dependent(s) will receive the “core medical plan benefits” (HMO or PPO Plan). The HRA is not part of the COBRA core medical plan benefits. As such, the individual and dependent(s) covered by the Employer’s COBRA will need to cover the full Deductible Benefit costs associated to the COBRA Plan, less any reimbursement paid in the Plan Year while the individual was an eligible under the Employer’s health plan before the termination of coverage had begun.