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Small Business Employee Benefits and HR Blog

Health Reimbursement Arrangement (HRA) FAQs for Employees

Last week we provided a list of HRA frequently asked questions (FAQs) for employers to consider as they set up a Health Reimbursement Arrangement (HRA). This week, we're providing a list of the most frequently asked questions by employees.  These are compiled from our help and support center for our employees and employers. 

HRA FAQs

What types of expenses can I submit for reimbursement through my HRA?

Medical expenses are reimbursable through your HRA if it is considered to be a qualified medical expense by the IRS, including premiums for personal health insurance policies. Within the IRS rules, employers may restrict the list of reimbursable expenses in any way they choose. For more information, see IRS Publication 502 or refer to your HRA Plan Documents.

What are the tax benefits of my HRA?

HRA reimbursements are tax-free. Meaning, the HRA reimbursements you receive are not subject to income or payroll tax withholdings. You do not need to report HRA reimbursements as income.

Does my HRA balance carry forward year to year?

It depends how your employer has set up the HRA. Balances may roll forward from year to year unlimitedly, at a capped (maximum) amount, or not at all ("use it or lose it"). Refer to your Plan Documents for how your HRA is set up.

Can I submit claims that exceed my HRA balance?

Yes. A good HRA software will track and carry-forward unpaid balances until adequate funds have accumulated. If an eligible expense will exceed your available balance, you may submit the claim immediately instead of waiting until sufficient HRA funds accumulate. The approved claim is paid off as allowances accrue. You would continue to receive partial reimbursements until the entire claim has been reimbursed.

How does the HRA reimbursement process work?

An HRA is a notional arrangement. In other words, no funds are expensed until an expense reimbursements are paid. With an online HRA administrator (such as Zane Benefits), employers reimburse employees directly only after the employees incur approved medical expenses. The online HRA software tracks all balances, expenses and reimbursements.

To request HRA reimbursement, you will submit a claim to your HRA administrator.

The Comprehensive Guide to the Small Business HRA 

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