Many employers are using consumer-driven health care to lower both their own health insurance costs and that of their employees. High-deductible health plans offer lower premiums than traditional plans, and coupling those plans with health reimbursement arrangements, or HRAs, can provide added protection from high costs along with those premium savings.
The health reimbursement arrangement is an employer-funded account that your company sets up for you when you sign up for a high-deductible health plan. This HRA account is used to pay legitimate medical costs that are not paid by your health plan. You can, for instance, use the funds in the HRA to pay for the cost of doctor visits, prescription drugs and other items until you exhaust the money in the account. Some companies fund their workers' HRA accounts with the entire amount of the health plan's deductible, while others make the HRA less than the entire amount of the deductible. When evaluating your various health care options, it is important to compare the cost of the premiums and the funding you get with your HRA.
Individual vs. Family Plan
The amount of money the employer puts into the HRA depends on whether you have an individual or a family plan. If you have an individual plan, you will typically get less in your HRA than if you have a family plan. Every employer is different, so it is important to review the program details to determine how much your employer will kick into your HRA, and whether or not that HRA will cover the full cost of your deductible.
High-Deductible Health Plans
In order to have a health reimbursement arrangement you must first have a high-deductible health plan, known in the industry as an HDHP. Not all health plans qualify as HDHPs, and your employer will let you know which plans qualify and which ones come with an HRA account. As your open enrollment period approaches, start thinking about the HRA, and ask your human resources department which health plan options come with an employer-funded HRA.
The money in your employer-funded HRA can roll over from year to year, allowing you to accumulate additional funds and eliminating the need to spend all the money as the end of the year approaches. It is important, however, to review your own employer's plan to make sure you will not lose any of the money you are due. For instance, the money will only roll over from year-to-year if you remain in the high-deductible health plan option. If you decide to change to a plan with a lower deductible, you could lose any money you do not spend by the end of the current plan year.