HRA Glossary - Health Care Terms

Health Reimbursement Arrangements Glossary

Affiliated Employer - Any entity who, within the context of Code § 414(b), (c), or (m) of the Code, will be considered with the Employer as a single employer for purposes of Code § 105.

Anniversary Date - The first day of any Plan Year.

Benefits - Any amounts paid to a Plan Participant (or on behalf of the Participant) for Eligible Medical Expenses incurred during the Participant's Coverage Period by a Participant, his Spouse, and/or his Dependents.

CAP - Employer has option of setting a maximum amount of claims that can be paid during a specified length of time from a combination of Employer's Contributions and Employee Carry-Over Funds.

Carry-Over Amounts - Unused amounts under an HRA that are "carried over" after the Closing Period at the end of the Plan Year according to the parameters set by the employer.

Consumer Driven Health Plan - Arrangement which gives the employee two or more choices of health plans, financial incentive to use health benefits wisely, and (usually) web-based decision support tools providing employee with access to general health information and specific provider services. The employee can select the health plan arrangement most suited to the employee's needs. Also see Defined Contribution Health Plan.

Contribution Period - The Period during which the Employer will contribute to the HRA. For instance, the Employer may contribute on a monthly, quarterly, or annually basis.

Coinsurance - Coinsurance splits the responsibility for the medical expenses between the employee and the health insurance plan (or between the employee and the employer) on a percentage basis. The most common coinsurance level is the 80 percent coinsurance where the employee pays 20% of the expenses and the insurer pays 80 percent.

Coverage Period - Plan Year or portion thereof that the Employee participates in an HRA. An HRA is unlike an FSA in that the Coverage Period is not required to be 12 months.

Dependent - Any individual who qualifies as a Code § 152 tax dependent. If the individual is a relative, the employee must provide over half of the relative's support. If the individual is not a relative, the individual must also be a member of the employee's household and reside with the employee for the entire tax year.

Defined Contribution (DC) Health Plan - Plan which sets employer contributions at a certain projected cost level rather than offering a specified benefit regardless of cost. Offered to encourage more efficient use of the employer-provided health card. See Consumer Driven Health Plans (CDHPs).

Eligible Medical Expenses - Those Code § 213 expenses incurred by the Participant, or the Participant's Spouse or Dependents, that satisfy any further conditions set by the Employer.

Employee - Any individual that the Employer classifies as a common-law employee and who is on the Employer's W-2 payroll, but does not include any leased employee (including, but not limited to, those individuals defined in Code § 414(n)), or an individual classified by the Employer as a contract worker or independent contractor, temporary employee or casual employee, self-employed individual as defined in Code Section 401(c), whether or not any such persons are on the Employer's W-2 payroll or any individual who performs services for the Employer but who is paid by a temporary or other employment agency.

ERISA - The Employee Retirement Income Security Act of 1974, as amended from time to time.

FMLA - The Family and Medical Leave Act of 1993, as amended from time to time.

FMLA Leave - A leave of absence that the Employer is required to extend to an Employee under the provisions of the FMLA.

Gap - The portion between a High Deductible Health Coverage (HDHC) and the HRA for which the Employee has responsibility.

High Deductible Health Coverage ("HDHC") - Group Health Plan with High Deductible Health Coverage.

Health Reimbursement Arrangement ("HRA") - Can refer to one HRA or to a Plan with one or more underlying Health Reimbursement Accounts.

Highly Compensated Individual - Any individual defined under Code § 105(h), as amended, as a "highly compensated individual" or a "highly compensated employee.

Linked HRA - An HRA that is connected to a major medical health plan, usually a High Deductible Health Coverage (HDHC) policy/plan. The Employee must be a Participant in the health plan to participate in its associated (linked) HRA.

Participant - Any employee who becomes covered by an HRA.

Premium Reimbursement Arrangement (PRA) - A plan designed to reimburse employees for insurance premiums.

Spend-Down Option - Continuation coverage that may be offered by the Employer. A Participant has a choice of electing the Spend-down Option instead of COBRA continuation coverage.

Spouse - Spouse includes only a person of the opposite sex who is a legal husband or wife.

Stand-Alone HRA - HRA designed to pay for certain eligible medical expenses. Not tied to any major medical health plan. Also referred to as an Unlinked HRA.