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Health Reimbursement Arrangement (HRA)

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What is an HRA?
An HRA is a tax-free savings arrangement that allows employees to be reimbursed for eligible medical care expenses. HRAs are very often confused with Health Savings Accounts (HSAs) because of their similarities. However, an HRA does not require enrollment in a High Deductible Health Plan. HRA plan designs may vary considerably. HRAs may be linked to a health insurance plan and provide additional coverage or you can have an HRA stand by itself. An HRA may provide reimbursement to active employees, retirees or both. HRA are often times funded through a Voluntary Employee Beneficiary Association (VEBA) as described in Internal Revenue Code 501(c)(9) or an IRC 115 Integral Part Trust. An HRA requires the establishment of a Plan Document. The Plan Document provides the features and the administrative processes by which the HRA will run. An EBC representative can help you build a plan that fits your specific goals.

An HRA is somewhat advantaged over an HSA in that with the help of a consultant you can design a Plan that works for your employees. Employers do not pay FICA on contributions into an HRA making it a great way to fund post-employment health care benefits for your employees.

Funding Options
Employer contributions or mandated employee contribution. An EBC representative will review funding and participation language to ensure compliance.

Eligible Expenses
Participants in the Plan are using their funds to cover a long list of eligible health care expenses. For example, you can use the money in your account to pay for your health insurance or dental premiums, co-pays and deductibles. You can use the money to cover eye care expenses (e.g., eye exams, contact lenses or contact lens solution). You may even use the money in your account to cover over-the-counter (OTC) items that don’t require a prescription.

Eligible expenses include those expenses which are deductible for federal income tax purposes. These include expenses related to the diagnosis, care, treatment or prevention of disease. For a complete list of eligible expenses, please click here.

How Do I Get My Money?
Remember, this is a reimbursement program. You must submit a claim form and proper receipts in order to get reimbursed.

Note: Proper documentation must be provided to EBC before reimbursement will occur. Please refer to your Plan Document or call EBC if you have questions regarding proper receipts.

What is the Reimbursement Schedule?
The reimbursement schedule may vary by employer. Usually, EBC will reimburse directly for your medical out-of-pocket expenses. Payments will be made to the plan participants who submit proper claims quarterly.

EBC can also set you up on a payment schedule for your health insurance premium costs, with the timing and frequency mutually agreed upon by EBC and your employer.

How will my assets be invested?
Your HRA funds will be placed in a Money Market or Fixed Interest Account. Other options for investing your funds are provided through MG Trust. If you need assistance selecting investments EBC will line you up with a Registered Investment Advisor in your area to assist you. EBC will send you statements via U.S. mail. You may also view your account on-line as often as you like.

Health Reimbursement Arrangement Forms

HRA Beneficiary Designation
HRA Letter of Medical Necessity
HRA Reimbursement Claim Form
Direct Deposit Form
HRA Suspension Election Form
Contact Information Change Form

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