It’s hard to believe that employers can actually reimburse their employees for their health insurance and medical expenses and save money in the process. By using health reimbursement accounts or HRAs, an employer doesn’t have to spend an exorbitant amount of money on expensive policies that fall under the category of one-size-fits-all plans that are designed for larger groups. When the employees purchase their own health insurance and pay their own medical expenses, an employer can pay them back from their HRA account.
Create an HRA
An employee can work with their employer to create an HRA account. Both parties can make tax-free deposits into the account. An HRA can be created to hold a specific amount of money each year. This money is used to repay any funds that an employee spends on health insurance premiums and other medical expenses that may be incurred. This can mean aspirin for headaches or co-pays for doctor’s visits. Almost any medical or health-related expense is capable of being reimbursed.
Employees Pay For Health Insurance and Medical Expenses
With an HRA account, employees know they will get their money back. Sometimes, it is necessary to pay for things out of pocket. Unlike traditional group plans that have yearly deductibles and large co-pays that must be met, with an HRA, all expenses can be paid for by simply producing valid receipts and submitting them to your employer. Most health and medical expenses are covered as long as they produce some type of receipt.
Employees Provide Proof of Expenses
Once an employee has purchased medical supplies, paid health insurance premiums, or co-pays, they must provide a valid receipt for each expense to their employer. As soon as the employer has validated the expense and logged the receipt, they can cut the employee a check to reimburse them for any of the medical expenses they have paid for out of pocket. The money in the HRA account builds interest for as long as it is in the account.
Employers Reimburse Employee to the Specified Amount
The federal government allows so much money to be put in an HRA account each year. The money is deposited in the account before it is taxed. This means that the employee has access to more money than if they had signed up for a group savings account. With every receipt they submit, they are reimbursed out of the HRA up to the amount specified by the state. An HRA account has all of the benefits of traditional savings account without the money being taxed before it is deposited.
With an HRA account, both the employer and employee save money in the long run. They get to take advantage of funds that are set aside prior to being taxed for the sole use of paying health and medical expenses of all kinds. Contact our agents at Randy Jones Insurance Services as soon as possible to learn how an HRA account can benefit you! Understanding the benefits of an HRA can simplify how you look at health insurance.