The HRA combines a high deductible insurance
plan with a separate funding vehicle which is used to pay for day to
day medical expenses. Dependent on the insurance carrier and final
plan design, an employer can normally lower the fixed cost of insurance
premium by an average of 40%.
The HRA funding vehicle is a non-interest bearing account owned by the
company and is provided to the employee on a defined credit limit basis.
Monies in that account are used on an as needed basis to reimburse expenses
on behalf of the employee when those medical expenses are actually incurred.
Any unused balance can either return to the corporation or roll forward
to off-set future expenses.