HRA Flexibility

What happens to an employee's balance when they leave the company?

There are two options available to you when an employee leaves with an HRA account balance. The first option is to allow the employee to participate in the HRA through COBRA. The employee will pay the entire premium amount for the HRA and any health plan that it is linked with. Another option for the employee is to have access to the money through a spend-down provision.

What is a spend-down provision?

When an employee is no longer with the employer and has a balance in an HRA, spend-down allows the employee to receive reimbursement for valid expenses that were incurred after employment ended. The entire amount in the HRA or a percentage may be available for the spend-down provision.

Can an employee take the HRA balance with them when they leave for another job?

An HRA account balance will typically not transfer with an employee when they go to another job. The purpose of the HRA is to provide the employee with access to healthcare with aid from the employer. The balance in the account will generally not transfer to another employer. However, one provision that is typically available for an employee when they leave is the spend-down.

Can an employee cash out and take the HRA funds as additional income?

No. Currently with the HRA regulations, there is not an option for taking the HRA funds as a cash option. HRA funds are only available to reimburse eligible medical expenses incurred by the employee or their dependents

What if the employee retires?

The individual plan design of your HRA may allow for certain eligible expenses to be covered once you retire. Insurance premiums as well as other expenses such as prescription drugs and office visits may be reimbursed with rollover funds accumulated from previous years of participation in the HRA.