Health reimbursement arrangements (HRAs) are becoming increasingly common as more employers are seeking an alternative to traditional health benefits. Employees that are newly offered an HRA through their employer can be confused about how an HRA works. They might be used to another type of health benefit, like traditional group health insurance. This could even be the first time they’ve been offered a benefit by an employer.

For employees in this situation and employers wanting to help them, we’ve compiled 7 of the questions employees most frequently ask about HRAs.

Administering your company’s health reimbursement arrangement (HRA) comes with its own set of challenges and questions. In this article, we cover 5 tips you can use to administer confidently and legally. Along the way, we also mention a few of our favorite tools to help you succeed in your HRA journey.

A health savings account (HSA) is a tax-advantaged savings account a family or individual can use to pay for qualified medical expenses. HSAs are paired with a high-deductible health plan (HDHP) and have an annual contribution limit. Each year, the IRS adjusts the guidelines regarding HDHPs and HSA contribution limits.

When the Affordable Care Act went into effect, it guaranteed that everyone who applied for individual health insurance would be approved for and enrolled in coverage. However, to prevent people from signing up for insurance only when they get sick, the ACA restricted enrollment to specific open enrollment periods—typically a period of three months from November to January.

The qualified small employer health reimbursement arrangement (QSEHRA), also called a small business HRA, comes with annual contribution limits. In practical terms, that means small businesses are limited in how much tax-free money they can offer their employees through the benefit.

Every year, the IRS outlines these annual contribution limits through a revenue procedure. 

In 2020, small businesses may offer up to $5,250 per self-only employee and up to $10,600 per employee with a family.