HRA Administration for Small Business - HRA Plan Docs

The Legal Definition The Internal Revenue Code defines medical expenses in  26 U.S. Code § 213 : (d) Definitions For purposes of this section— (1) The term “medical care” means amounts paid— (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, (B) for transportation primarily for and essential to medical care referred to in subparagraph (A), (C) for qualified long-term care services (as defined in section 7702B(c)), or (D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)). The Internal Revenue Service (IRS) establishes guidelines for what types of medical expenses may be reimbursed tax-free through an HRA. Th...

All HRA plans, from the Single Participant 105 plan to the Qualified Small Employer HRA, function in similar ways. Over the years employers have begun to realize the value of the HRA as a total replacement strategy What is a Health Reimbursement Arrangement (HRA)? There are two families of HRA, traditional Section 105 HRAs and Qualified Small Employer 9831(d) HRAs. Both are employer-funded health plans that reimburse employees tax-free for eligible out-of-pocket medical expenses, including individual health insurance premiums. The differences lie in the plan structure, various structures have evolved over the decades to comply with the constantly changing regulatory environment.  How do they work? Employers define a dollar amount they are willing to contribute to employees’ medical expenses. Employees spend money on qualified medical expenses and submit a request to be reimbursed and proof of the expense to the employer or the employer’s claim reviewer. Once approved the company re...