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 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.
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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.
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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
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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.
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