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HRA Overview: How It Works

Explore Health Reimbursement Arrangements (HRAs)

 

Video Transcription

This presentation will discuss Health Reimbursement Arrangements and how you can use them with CDPHP.

Health Reimbursement Arrangements, or HRAs, work with your deductible health care plan to help bridge the gap between your out of pocket expenses and your insurance coverage.

So how does that work?

Your health insurance plan may include deductibles, copayments or coinsurance. These are your out of pocket expenses.

  • A deductible is the amount you owe out of pocket for eligible health care services before your health plan begins to pay. So if your plan’s deductible is $1000, your plan won’t pay anything until you’ve paid $1000 first for eligible health care services.
  • A copayment is a fixed amount you pay for a covered health care service, and is usually paid at the time of service.
  • Coinsurance is your share of the costs of a covered health care service, calculated as a percent of the allowed amount for the service.

An HRA is a healthcare account that can be used to help you pay for your qualified out-of-pocket medical expenses. Your HRA is fully funded by your employer, who determines the amount in your account and what medical expenses qualify for reimbursement. And since employer funds deposited in your HRA are not considered part of your income, qualified reimbursements are tax-free.

For example, an HRA is paired with a health plan that has a $1500 deductible that must be satisfied before the health plan coverage begins. The employer has funded $750 of the deductible. So the employee is responsible for the remaining $750 of the deductible out of pocket.

CDPHP gives you three ways to use your HRA funds; CDPHP’s HRA Claims Integration, debit card, or manual claim.

  • HRA Claims Integration saves time and eliminates hassle by substantiating claims and paying your health provider directly on your behalf.

    It works like this:

    After you have received medical services from your health care provider, your provider bills CDPHP directly and CDPHP automatically uses your HRA to pay the provider. You save time since you no longer need to file separate claims for medical expenses that apply to your deductible such as doctor office visits, urgent care visits, or outpatient surgery.

  • Your employer may provide you with a debit card to be used for eligible HRA expenses. While debit cards are not to be used for qualified HRA expenses incurred at the doctor’s office, they can be used for other eligible expenses, such as pharmacy, dental, and vision.
  • If you paid for an eligible HRA expense out-of-pocket, you can submit a claim for reimbursement. You can mail a claim form to CDPHP, or submit the request online. 

Let’s look at example of an HRA in action:

Joanne’s company provides an HRA funded at $750 coupled with a health plan that carries a $1500 deductible. Once her deductible is met, her plan will cover eligible services and she is responsible for a copayment. 

During her plan year, Joanne incurs a $650 medical expense for minor surgery. Her provider bills CDPHP. CDPHP receives the claim for $650, applies that amount to her deductible and pays the provider out of her HRA. $100 is left in her HRA and $850 of the deductible still needs to be met.

Later in her plan year, Joanne has an additional $850 medical expense for an emergency room visit. Her provider bills CDPHP. CDPHP applies the $100 remaining in Joanne’s HRA to the deductible, and Joanne is responsible for paying $750 out of pocket to satisfy the remainder of the $1500 deductible.

CDPHP has a variety of online tools that you can use to monitor and manage your HRA. Visit our secure site by logging in or registering at www.cdphp.com. From there you will be able to:

  • View claims
  • Track balances
  • Submit claims
  • Request additional debit cards, and
  • Arrange to have manual claims reimbursements direct deposited into your checking account

To sum up, in this presentation you saw

  • The benefits of Health Reimbursement Arrangements
  • How HRAs integrate with your health plan
  • How CDPHP makes it easier to use your HRA, and
  • The online tools which are available to you through our secure member site