Health Reimbursement Arrangement (HRA)
The Health Reimbursement Arrangement (HRA) is an IRS regulated, employer-sponsored benefit plan that allows participants to receive reimbursement for eligible out-of-pocket healthcare expenses. Contributions made through an HRA are 100% employer funded, so they are entirely free of federal, state and Social Security taxes.
The Health Reimbursement Arrangement allows for certain healthcare expenses to be reimbursed. Employer contributions are placed in a special account to be used by participants for eligible expenses. Participants may receive reimbursements up to the total amount contributed by the employer.
There is no income tax reporting required when participating in this account. The employer-funded contributions are free of federal, state and (in most cases) Social Security taxes and do not even appear on a W-2 as reported income.
Reimbursements are received by faxing, emailing or mailing claims and supporting documentation directly to SASI. After the claim has been reviewed and the expense approved, payment is then issued to the participant via direct deposit or a check.
The employer determines eligibility for this benefit (within discrimination requirements) and the contributions to be provided. An employer may require reimbursements to be issued from the Healthcare FSA first (if applicable) before HRA funds can be utilized.