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HRA

Understanding a Health Reimburse-ment Arrangement

What is a Health Reimbursement Arrangement?

 

What are the benefits of an HRA?

 

Who is eligible for an HRA?

 

Are HRAs really best only for the young and healthy?

 

What is an HDHP?

 

Contributions to an HRA

 

Distributions from an HRA

 

Qualified Medical Expenses

 

Balance in an HRA

 

What if I terminate my employment during the Plan Year?

 

Will I have any administrative costs under the HRA plan?

 

How long will the HRA plan remain in effect?

 

Are my benefits taxable?

 

What is the difference between an HRA and FSA?

 

What does the IRS require me to report on my taxes concerning my HRA?

 

*Over-the-counter medications are considered to be qualified expenses only if purchased with a prescription (except for insulin, which is considered to be a qualified expense even without a prescription).

Examples of Eligible Expenses

You may use your Health Reimbursement Arrangement (HRA) to pay for medical care expenses that are incurred by you, your spouse or your dependents and are not reimbursed by your health plan. These out-of-pocket expenses may include copayments, coinsurance and deductible amounts under your health plan and eligible medical care expenses that are not covered by your health plan.

Medical care expenses are amounts paid for the diagnosis, cure, treatment or prevention of disease, and for treatments affecting any part or function of the body. Also, to be an expense for medical care, the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness.

Medical Care Expenses

The products and services listed below are examples of medical care expenses. A determination of whether an expense is for “medical care” is based on all the relevant facts and circumstances. This list is not all-inclusive; additional expenses may qualify, and the items listed below are subject to change in accordance with guidance from the Internal Revenue Service (IRS).

 

Also, keep in mind that every employer can design its HRA differently. Your HRA may reimburse all permitted medical care expenses, or it may cover a narrower list of medical care expenses.

  • Acupuncture
  • Alcoholism treatment
  • Ambulance
  • Annual physical exam
  • Artificial limbs
  • Artificial teeth
  • Bandages
  • Body scan
  • Braille books and magazines (only amounts above the cost of regular printed material)
  • Breast pumps
  • Breast reconstruction surgery following mastectomy
  • Capital expenses (improvements or special equipment installed to a home, if meant to accommodate a disabled condition)
  • Cancer screenings
  • Car modifications or special equipment installed for a person with a disability
  • Chiropractor
  • Christian Science practitioner (fees for medical care)
  • COBRA premiums
  • Contact lenses
  • Contraceptives
  • Crutches
  • Dental services and procedures (not including teeth whitening)
  • Diagnostic items and services (for example, blood pressure monitoring devices and blood-sugar test kits and test strips)
  • Disabled dependent care expenses (medical care of the disabled dependent)
  • Drug addiction treatment
  • Durable medical equipment (if used to relieve sickness or disability)
  • Eye exam
  • Eye glasses/contact lenses
  • Eye surgery
  • Fertility enhancement (for example, in vitro fertilization or surgery)
  • Flu shots
  • Guide dog or other service animal
  • Hearing aids
  • Hospital services
  • Insulin
  • Insurance premiums for health insurance and qualified long-term care insurance (restrictions apply)
  • Laboratory fees
  • Lactation expenses
  • Legal abortions
  • Lodging at a hospital or similar institution
  • Long-term care services (restrictions may apply)
  • Medical conference expenses, if the conference concerns a chronic illness of yourself, your spouse or your dependent
  • Medical monitoring and testing devices
  • Medications, if prescribed
  • Nursing services
  • Occlusal guards to prevent teeth grinding
  • Operations
  • Optometrist
  • Orthodontia
  • Osteopath
  • Over-the-counter medicine and drugs (if prescribed)
  • Oxygen
  • Physical exam
  • Pregnancy test kit
  • Preventive care screenings
  • Prosthesis
  • Psychiatric care
  • Psychologist
  • Psychoanalysis
  • Speech therapy
  • Sterilization
  • Stop-smoking programs
  • Surgery
  • Telemedicine (medical practitioner’s fee)
  • Telephone/television for hearing-impaired individuals
  • Therapy received as medical treatment
  • Transplants
  • Transportation for medical care
  • Vaccines
  • Vision correction surgery
  • Weight-loss program if it is a treatment for a specific disease
  • Wheelchair
  • Wig (if prescribed for mental health of patient)
  • X-rays