GUIDE TO HRAs

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Liferaft's 2023 Guide to HRAs is the most comprehensive guide available, giving you everything you need to determine if an HRA makes sense for your business.

What is an HRA?

A Health Reimbursement Arrangement (HRA) is a health spending account an employer can use to reimburse employees tax-free for out-of-pocket healthcare expenses. Compared to group health plans, HRAs are more flexible, customizable, and affordable. Liferaft makes administering an HRA easy.
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Requirements & features

Depending on the type of HRA you are setting up, there will be different unique requirements that the Liferaft team will help you to easily navigate. All HRAs must be funded entirely by the employer, not through salary deductions, and the accounts can only reimburse employees for qualified and substantiated medical expenses.
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Eligible HRA expenses

HRAs only cover qualified medical and dental expenses, as defined by the IRS. Eligible expenses include costs to alleviate or prevent a physical or mental ailment, but not expenses for general health maintenance such as vitamins. Employers have the right to exclude any qualified expense from their eligible reimbursable expenses.
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When an HRA makes sense

An HRA is often the most cost-effective option for a remote or distributed team, when there are major cost differences between the group and individual market, for employers hoping to expand benefits or offer benefits for the first time, or for companies who have a fluctuating workforce size.

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Different HRA types

Recent legislation has created even more types of HRA, giving employers even more flexibility over their benefits. It is now possible to use an HRA to reimburse employees for individual health insurance premiums. Plus, fewer restrictions on who can be covered by an HRA.
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HRA vs. HSA vs. FSA

There are three types of accounts people use to save for medical expenses: Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs). All three acronyms are similar, but there are significant differences between them.
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What is an HRA?

Learn more with Liferaft's HRA guide →

A Health Reimbursement Arrangement (HRA) is an account an employer can set up to reimburse employees for out-of-pocket healthcare expenses.

The funds in the account are not subject to taxes and can be used to cover a wide range of healthcare costs, including premiums, co-pays, and dental and vision expenses.

Compared to traditional group health insurance plans, HRAs are more flexible, affordable, and easier to administer. Plus, you can easily tailor plans to fit the specific needs of your employees.

Why employers love Health Reimbursement Arrangements

Available for all employers

Group health insurance can be complex, restrictive and unpredictable financially. With a health expense account, simply set a monthly benefit allowance and employees can use their benefits on any qualified medical expense they choose.

Cost-effective

Many states offer more affordable insurance plans on the individual market than on the small group market. A health expense account allows employers to fund all or part of their employees' health insurance costs with pre-tax dollars, freeing up budget without sacrificing benefits.

Flexible

With a health expense account, employees choose how to use their benefits, rather than being stuck in a one-size-fits-all group plan. This flexibility allows employees to tailor their coverage to fit their personal health, budget, and family situation.