Health Reimbursement Arrangements (HRAs) are a valuable and flexible tool for employers to provide health benefits to their employees. However, like many aspects of the insurance industry, there are some misconceptions about HRAs. Let’s debunk seven common myths and set the record straight.

Myth 1: HRAs Don’t Qualify as a Real Health Benefit

Debunked: HRAs are indeed a genuine health benefit. They are employer-funded accounts used to reimburse employees for qualified medical expenses. HRAs offer flexibility, allowing employees to use the funds for a range of medical costs, including premiums, copays, and deductibles. HRAs are a valuable addition to an employee benefits package.

Myth 2: HRAs Are the Same as HSAs

Debunked: HRAs and Health Savings Accounts (HSAs) have similarities, but they are not the same. HSAs are funded by both employers and employees, while HRAs are employer-funded. HSA funds roll over from year to year, while HRA funds are at the discretion of the employer. Understanding these differences is essential for choosing the right benefit for your organization.

Myth 3: HRAs Cost More Than Traditional Group Insurance

Debunked: HRAs can actually be a cost-effective option for employers. With traditional group insurance, employers pay fixed premiums, while HRAs allow them to set a budget and control costs by determining the amount they contribute. Employers can design HRAs to meet their budget while still providing valuable health benefits to employees.

Myth 4: HRAs Are Not a Long-Term Solution

Debunked: HRAs can be a long-term solution. Employers can choose between various HRA models, including the Individual Coverage HRA (ICHRA), which allows employees to purchase individual health insurance policies. This provides flexibility for employees and employers alike, making HRAs a viable long-term solution.

Myth 5: HRAs Are Too Complex to Administer

Debunked: HRAs can be straightforward to administer with the right technology and support. Many providers offer user-friendly platforms that simplify administration, making it easy for employers to set up, fund, and manage their HRAs efficiently.

Myth 6: HRAs Are Only for Large Companies

Debunked: HRAs are not exclusive to large corporations. They are suitable for businesses of all sizes. Smaller companies can benefit from HRAs as well, customizing their plans to meet the unique needs of their employees.

Myth 7: HRAs Are Restrictive for Employees

Debunked: HRAs offer employees flexibility in choosing their healthcare coverage. For example, ICHRA allows employees to select individual health insurance plans that best fit their needs and preferences. HRAs empower employees to take charge of their healthcare decisions.

In conclusion, HRAs are a valuable and flexible health benefit option for employers of all sizes. Debunking these common myths about HRAs sheds light on the opportunities and advantages they offer for both employers and employees. To explore the potential of HRAs for your organization, reach out to our local agents, who can guide you in implementing a customized HRA plan that meets your specific needs.