<img src="//bat.bing.com/action/0?ti=5067266&amp;Ver=2" height="0" width="0" style="display:none; visibility: hidden;">

We've updated one of our most popular materials. See what's new in our guide to MERPs.

A Guide to Health Reimbursement Plans

Use Cases to Understand Health Reimbursement Plans

This section provides an overview of how Health Reimbursement Plans are structured and used.

How Health Reimbursement Plans (HRPs) are StructuredHow_health_reimbursement_plans_structured-1

A Health Reimbursement Plan (HRP) is designed for individual health insurance reimbursement. It is also designed to comply with all applicable regulations.

As such, a Health Reimbursement Plan is structured to reimburse employees for:

  • health insurance premiums up to a specified monthly healthcare allowance, and

  • unlimited preventive care with no cost sharing.

Read more about Health Reimbursement Plan design requirements.

Health Reimbursement Plans (HRPs) are Notional

A Health Reimbursement Plan (HRP) is simply an agreement between the employer and employees. As such, an HRP is a notional arrangement where no funds are expensed until reimbursements are paid. Through an HRP, employers reimburse employees directly only after the employees incur an approved healthcare expense.

Health Reimbursement Plans (HRPs) Have No Contribution Limits

Unlike a Health Savings Account (HSA) or a Flexible Spending Accounts (FSA), there is no limit to the amount of money an employer can contribute to an employee’s HRP. There is also no minimum contribution amount.

Health Reimbursement Plans (HRPs) are Not Health Reimbursement Arrangements (HRAs)

HRPs and Health Reimbursement Arrangements (HRAs) are both types of Section 105 plans, but a key distinction between an HRP and an HRA is that an HRP does not impose a plan-wide maximum annual benefit and does not allow annual roll-over. For some employers, a stand-alone HRA is no longer a compliant vehicle for premium reimbursement because of the new Affordable Care Act "Market Reforms."

The Comprehensive Guide to the Small Business HRA