Maximizing the Benefits of Your Health Reimbursement Account

Maximizing the Benefits of Your Health Reimbursement Account

Health reimbursement account (HRA) is an employer-funded account that reimburses employees for certain medical expenses. The goal of an HRA is to provide employees with better control over healthcare expenses and promote a healthier lifestyle. While HRAs can be beneficial, many employees are unaware of how to maximize their HRA benefits. In this article, we will be discussing how to make the most of your HRA and the advantages of doing so.

1. Understand Your HRA

The first step to maximizing your HRA is to understand what it covers. An HRA can reimburse you for eligible healthcare expenses such as deductibles, co-payments, and other out-of-pocket expenses. It is important to note that not all expenses are eligible, and your employer determines what is covered by your HRA. It is therefore crucial to check with your employer or plan administrator to understand what your HRA covers.

2. Keep Track of Your Expenses

One of the best ways to maximize your HRA benefits is to keep track of all eligible expenses. The IRS requires that HRAs reimburse only qualified expenses. To avoid the risk of being audited or denied reimbursements, it is essential to keep a record of all eligible expenses, including the date, provider, and amount paid. You can do this easily by saving all your bills and receipts, or by using an expense tracking app.

3. Take Advantage of Preventive Care

Preventive care is an essential aspect of maintaining good health. Fortunately, many HRAs cover preventive care services, including annual physicals, immunizations, and cancer screenings. By taking advantage of these covered services, you can help maintain your wellness while incurring fewer out-of-pocket expenses.

4. Follow the Rules

To avoid forfeiting any unused funds in your HRA, it’s essential to understand the plan’s rules regarding contributions, rollovers, and forfeitures. Most HRA plans have a “use-it-or-lose-it” policy, meaning unused funds do not roll over to the next year. Therefore, it’s crucial to spend all funds before the plan year ends to avoid losing any unused funds.

5. Be Mindful of Tax Implications

HRA contributions made by the employer are tax-deductible for the employer, and employees do not pay taxes on the contributions. However, if you are not using your HRA for eligible expenses, you may have to pay taxes on the funds. Therefore, it is essential to plan your expenses carefully and avoid unnecessary expenses to avoid tax implications.

Conclusion

Maximizing the benefits of your HRA requires understanding your plan, knowing what expenses are eligible, keeping track of expenses, following the rules, and being mindful of the tax implications. By doing these, you can make the most of your HRA benefits and enjoy a healthier, cost-effective lifestyle. If you have any questions about your HRA, reach out to your HR department or plan administrator.