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Health Reimbursement Arrangements

Health Reimbursement Arrangements (HRAs) offer employers a valuable option in employee benefit plans. These are employer-funded arrangements, established and regulated by the IRS, that allow employees to be reimbursed for qualified medical expenses. After an employee incurs a qualified medical expense, he or she may submit any amount not paid by insurance or other plan to Hilltop National Bank and be reimbursed for that expense. Any contributions made into an employee’s HRA account by the employer are excludable from the employee’s gross income. Any unused funds will roll over from year to year.

 

Have questions? See our Frequently Asked Questions below, Call us today at (307)577-3459, or Email a Representative.

 

Health Reimbursement Arrangements FAQs

How much can an employee contribute to an HRA account?
None. Only employers may fund this account. Generally, if an employee is eligible under the employer’s group medical insurance plan, they will receive a contribution into an HRA account. HRAs work very well with high deductible health plans.

How much should an Employer contribute to each HRA account?
HRAs are flexible. Employers choose who is eligible, how much to contribute, and how often. We recommend contributing monthly (less exposure for employer if an employee terminates). Contributions generally range from $25-$200 per month. This money is sent to Hilltop National Bank and each employee account is funded.

What are the tax advantages of an HRA?
Employees will not be taxed on the value of their HRA. The employer will, subject to certain conditions and limitations, be entitled to a deduction for reimbursements made under the HRA.

Who is eligible to participate in an HRA?
Only employees, which generally means individuals who receive W-2 income. Self-employed, partners, and 2% Subchapter S shareholders are ineligible.

Can an Employer contribute different amounts for different employees?
Generally, no. An HRA must not discriminate in favor of highly compensated employees and must not base contributions on compensation, age or years of service. However, employers may set in writing who is and who is not eligible for the HRA.

What expenses may an employee be reimbursed for?
Employees may use this account for expenses not paid by insurance or any other plan. Deductibles, co-pays, office visits, prescriptions, lab fees, surgical procedures, hospitalization, vision, orthodontia and dental expenses are eligible for reimbursement.
Note: Some expenses, such as massage therapy, herbs, vitamins and minerals are NOT eligible for reimbursement unless prescribed as medically necessary in writing by a treating physician. Under the Affordable Care Act, individuals may use their HRA for over-the-counter medicine or drugs (“OTC Drugs”) only if prescribed by a physician (with the exception of insulin). Eligible expenses may be limited by the employer.

Can an HRA be used for Individual Insurance Premiums?
No. Employees may only be reimbursed for eligible out-of-pocket medical expenses. No premiums of any kind may be reimbursed from the account.

What happens if an employee doesn’t use all of their HRA money?
That is up to the employer. Employers may allow employees to roll over all or a portion of unused funds from year to year.

How are employees reimbursed? Employees complete a claim form, which we provide to the employer or can be filled out online, sign the claim form and attach claim substantiation (receipts, or preferably an Explanation of Benefits “E.O.B.” if the item is insurance eligible).  If an “E.O.B.” is not available, receipts MUST include the following:
• Name of patient(employee or dependent)
• Name of provider
• Date services were incurred
• Description of services provided
• Amount incurred for services provided on that date; cancelled checks and receipts with a balance forward cannot be used to obtain reimbursement.
Expenses paid by another health plan (i.e., insurance, spouse’s insurance and/or Section 125 Cafeteria Flexible Spending Plan, Workman’s Compensation, etc.) may not be reimbursed.

Mail or Fax claims to:
Hilltop National Bank
Attn: HR
P.O. Box 50566
Casper, WY 82605

or Fax to (307)577-3487
Claims are entered on a daily basis.

How often will employees be reimbursed?
Reimbursements can be issued daily, weekly or monthly as determined by the Employer/Plan Sponsor.

How can an employee find out their account balance?
Employees can check account balances, view claims and account activity, and print claim forms online by logging onto www.myrsc.com. They can also call Hilltop National Bank and speak to a representative, or review check stubs.

Does Hilltop National Bank have an administrative website for employers?
Yes! Employers can have online administrative access for employee maintenance, reports and forms.

Can unused HRA funds ever be cashed-out?
Unused HRA balances may never be cashed out, nor may an employee be given the right to receive the funds as taxable income. Employees may only receive HRA money in the form of a reimbursement for medical expenses.

What happens to HRA funds if an employee terminates?
That is up to the employer. Employers may keep the funds or allow an employee to have “ownership” in their HRA. “Ownership” permits employees to spend down all or a percentage of their accounts for future medical expenses. Generally, employees without ownership have 90 days to submit claims for expenses incurred on or before their date of termination.

Can an Employer have an HRA and a Section 125 Cafeteria Plan?
Yes, and we encourage it. Like the FSA option, you may submit any amount not paid by insurance or other plan to HNB for reimbursement from your HRA.  HRA funds roll over from year to year allowing employees to save for unexpected expenses.  We encourage the use of the FSA (also called the Section 125 Cafeteria Plan) for “known” expenses (i.e. Rx, Preventative, Dental, Orthodontia, Vision, etc.) and saving the HRA for the unknowns.

What are the benefits of an HRA?
Employers can decrease group health insurance premiums by increasing deductibles while helping employees to cover costs and fill the gap. HRAs are flexible, and employers can design an HRA to meet their unique needs. Balances can be rolled from year to year.

What are the fees for an HRA?
In order to meet IRS and ERISA compliance requirements, your plan must be in writing. Hilltop will supply you with the necessary documentation to meet these requirements. We charge a one-time set-up/ document fee and a monthly plan-processing fee.