Health reimbursement arrangements (HRAs) offer tax-advantaged payment for health care and provide employers the most flexibility of all health care accounts. When using HRAs to fund and reimburse health care costs, employers can choose the types of expenses eligible for reimbursement, whether to permit the carry-over of unused amounts to future years and whether the accounts will be funded or notional.
When paired with high deductible health plans, HRAs encourage consumerism by promoting individual control over and responsibility for health care spending decisions. Specially designed retirement-only HRAs can be used to reimburse medical expenses incurred only after retirement.
Current IRS rules do not permit employee contributions, limiting their attractiveness for some employers. Complex coordination rules with health flexible spending accounts (FSAs) and health savings accounts (HSAs) also complicate HRA administration. Finally, under ACA rules employers are not permitted to offer stand-alone HRAs to active employees but may use them to help retirees.
National Business Group on Health's Position Statement on Health Accounts
The National Business Group on Health supports regulatory and legislative efforts to promote consumer-directed health care and health accounts.
Policy Brief — Policies to Enhance Affordable Health Coverage: Consumer-Directed Health Plans
This public policy brief examines the impact of this type of coverage on costs, quality and other important factors. It also recommends policy changes suggested by the research to make these types of plans easier to use for needed health care services.