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  • Health Reimbursement Arrangement (HRA)

    An HRA is a tax-favored, employer-funded health reimbursement arrangement with a built-in carry over provision. This allows unused funds in one plan year to be used in a subsequent plan year. You, as the employer, decide what amount to allocate to employees for their healthcare expenses during a plan year. Employees then access those funds to pay qualified expenses.

    Many companies pair the HRA with a high-deductible medical insurance plan, and allow employees to use HRA funds to pay expenses while they’re meeting the deductible. Often, employers can fund the HRA with money saved on health insurance premiums simply by switching from a benefit-rich copay plan to an inexpensive high-deductible health plan.

    Advantages of an HRA

    • It gives your employees choice and control over their healthcare spending.
    • It puts employees in touch with the true costs of healthcare and encourages them to become better consumers.
    • It can help you control benefit costs by offering an inexpensive high deductible health insurance plan plus first-dollar coverage through the HRA.
    • The carry over feature and optional benefit debit card increase employee satisfaction.

    The Benefit Debit Card 

    For a small additional charge, you can provide your HRA enrollees with a benefit debit card, a special MasterCard® that draws on the value of the HRA election amount. For more information, download our flier (PDF) or visit our Benefit Debit Card page

    Flexibility for You

    HRAs allow you a great deal of flexibility as the plan sponsor. In setting up your HRA, you’ll decide:

    • How much to allocate to each employee’s account.
    • Whether you’ll allow unused funds to roll over at the end of the year, and if so, how much can be carried forward.
    • What types of medical expenses will be reimbursable.
    • Whether you’ll provide employees with benefit debit card access.

    How it Works

    You work with your insurance agent and a PacificSource Administrators (PSA) Representative to design an HRA plan for your organization.

    1. PSA sets up your HRA account according to the plan you’ve designed.
    2. As your employees incur medical expenses, they send them to PSA for adjudication and reimbursement. With the optional benefit debit card, there’s no need for employees to pay first—they simply use their card to pay for covered expenses, and the claim is automatically submitted to PSA.
    3. Once payment for authorized claims has been received, PSA will reimburse your employees for their expenses.