In a stand-alone HRA configuration that is employer-funded, an employer promises to reimburse eligible medical expenses via an HRA that is not integrated with a major medical plan. If an HRA is a stand-alone plan, an employee could participate in the HRA without participating in the employer’s major medical plan.
A stand-alone employer-funded HRA might be designed to reimburse:
- Any out-of-pocket medical expense that meets the Code Section 213 definition of medical care, such as co-pays, deductibles and medical expenses that are not covered by an employer’s major medical plan (but excluding reimbursement for health insurance premiums);
- Only dental or other specified out-of-pocket medical expenses;
- Only health insurance premiums (such a plan is often referred to as a premium reimbursement arrangement or PRA); or
- A combination of the above.
A stand-alone employer-funded HRA plan could be designed to limit participation to retirees only.