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FAQs for Employers and Brokers*
What is an HRA?
Advantages of an HRA
Flexibility for you
Who is eligible to participate in an HRA?
What medical expenses can be reimbursed with HRA funds?
What expenses are not reimbursable?
Is the HRA allocation based on a calendar year or a rolling plan
year?
Can I as an employer define the HRA carryover amount?
Can employees use their HRA funds
to pay COBRA premiums after termination?
Automatic reimbursement
What is an HRA debit card?
Can employees use a debit card to pay for over the counter medicines?
Can the employees use their debit card
to pay for all mail-order pharmacies?
What happens if the receipt shows the employee accidentally used
the debit card for an ineligible expense?
How do the employees submit a paper (manual) request for reimbursements through the mail?
Accessing Your HRA Funds
Accessing Your Account Information
Monthly Statement
What is an HRA?
An HRA is an employer-funded arrangement that reimburses
employees for qualified medical care expenses. HRAs are
typically combined with a high deductible health plan.
Advantages of an HRA
- Employees are given choice and control over their healthcare spending
- Employees are encouraged to gain a better understanding of the true costs of healthcare and become better consumers
- You as an employer can more effectively control benefit costs by offering inexpensive high deductible health insurance in combination with an HRA
Flexibility for you
As a plan sponsor, HRAs will allow you a great deal of
flexibility. In setting up an HRA, you will be able to determine:
- How much to allocate to each employees account.
- Whether unused funds may roll over at the close of the plan year, and if so, how much can be carried forward.
- Which types of medical expenses will be reimbursed
- If a debit card will be offered as a reimbursement option.
Who is eligible to participate in an HRA?
All employees are eligible to participate in HRAs, with the
exception of owners and partners. According to IRS guidelines,
anyone with two percent or more ownership in a schedule S
corporation, LLC, LLP, PC, sole proprietorship, or partnership may
not participate.
What medical expenses can be reimbursed with HRA funds?
You as the employer will largely be responsible for determining
which expenses will be offered reimbursement. You may offer
reimbursement for out of pocket medical expenses (e.g., deductible,
co-insurance, and plan limits that are not covered by the HDHP) or
you may allow a broad range of health-related expenses by adopting
the IRS Section 213(d) definition of eligible expenses and allowing
HRA reimbursement of the same expenses eligible under a healthcare
FSA, including medical, dental, vision, prescription drugs.
What expenses are not reimbursable?
- Medical expenses that are not defined as eligible expenses by the employer
- Medical expenses that do not meet IRS Section 213d requirements
Examples of expenses that are not eligible for reimbursement can be found on
a list of IRS non-eligible health-related expenses in Publication 502, which is
accessible online at www.irs.gov.
Is the HRA allocation based on a calendar year or a rolling plan
year?
In general, the HRA allocation is based on the plan year.
However, if you purchase an HRA plan mid-year, you may consider adjusting the
plan year to coincide with your medical plans calendar year deductible. In that
case, the first (partial) years HRA allocation will be prorated, and begin the
full annual allocation on the following January 1.
Can I as an employer define the HRA carryover amount?
Yes, you may limit the amount that may be carried over for an
HRA, and you may choose to impose an annual carryover maximum. The total HRA
account balance may also be capped if you wish.
Can employees use their HRA funds
to pay COBRA premiums after termination?
You decide. Employees may access their remaining HRA funds as
long as they remain on continuation coverage, but you choose whether to allow
continuation premium as an eligible expense under their HRA.
Automatic reimbursement eliminates paper work for employees as a covered health expense is processed by their Blue health plan, HRA funds can be distributed by automatic reimbursement. This process capability is determined by the employer.
What is an HRA debit card?
The debit card gives an employee access to their health reimbursement arrangement (HRA) with convenience. Funds can be accessed without having to complete and file forms. The card can be used whenever an eligible expense is incurred at a qualified provider (such as an office visit or prescription at a pharmacy). The debit card can be used to pay for expenses rather than requiring the employee to pay and wait for their reimbursement. This option is determined by the employer and specific plan.
Can employees use a debit card to pay for over the counter medicines?
Employees may use their debit card to pay for some over-the-counter drugs, but please keep in mind that they may be asked to submit receipts and documentation for these purchases. The Internal Revenue Services (IRS) does allow reimbursement for some over-the-counter drugs, including antacids, allergy medicines, pain relievers and cold medicines. Employees can verify IRS approved over the counter medicines by accessing the www.irs.gov website.
Can the employees use their debit card to pay for all mail-order pharmacies?
Employees may use their debit card to pay qualified mail order prescriptions by providing the card information to the mail order pharmacy in a similar manner as in any other mail-order transaction using a credit card for payment.
What happens if the receipt shows the employee accidentally used the debit card for an ineligible expense?
An employees account can only be used to pay eligible medical expenses and the employee is responsible for reimbursing the account if the card is used either accidentally or intentionally to pay an ineligible expense. Items such as magazines and snacks purchased at the pharmacy that are not qualified expenses cannot be paid for with the debit card.
How do the employees submit a paper (manual) request for reimbursements through the mail?
Employees may submit requests by completing, signing and submitting a Reimbursement Request Form with the appropriate documentation. The employee will need to provide a copy of their Explanation of Benefits or copies of their receipts for prescriptions or non covered health related expenses.
Accessing Your HRA Funds
Employees may use the Blue Healthcare Bank debit card at any point-of-service location that accepts debit card payments. Funds can also be accessed by auto reimbursement of any Blue Plan submitted claim or self reimbursement submitted by the employee for manual processing.
Accessing Your Account Information
Blue Healthcare Bank HRA account information is available to your employees day or night. During the day, employees may call our Customer Service toll free at 1-800-663-BLUE, Monday Friday, from 7:00 a.m. to 8:00 p.m. Central Time. Employees may also access account information online anytime at: www.blueheathcarebank.com/member.
Online account information includes:
- Current available balance of their HRA.
- Recent account transactions
- Year to Date account information
Monthly Statement
Blue Healthcare Bank provides monthly statements
detailing account balance and activity that will be mailed to the employees home address.
*The Bank will make reasonable efforts to update these FAQs as needed to reflect changes in federal regulations. However, these FAQs do not constitute legal advice and The Bank makes no warranties with respect to the same.
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