HRAs explained

When it comes to setting up a health reimbursement arrangement (HRA), you have some flexibility. Here is some information to help you make decisions about implementing an HRA.

How HRAs reimburse qualified expenses

  • PriorityHRASM has four simple setup options:
    • The HRA allocation
    • Who pays first
    • What expenses are reimbursable - for example, deductible by itself or coinsurance and deductible
    • Whether or not HRA dollars can be carried into future years

When both coinsurance and deductible are reimbursed

HRA dollars come from one source, and once members begin using their funds, they can't stop until the funds have been exhausted. This means you can't designate a portion of the HRA funds to go toward coinsurance and the other portion to go toward deductible. You have to reimburse deductible and coinsurance continuously.

Here are some examples of HRA reimbursement for a medical plan with a $2,000 deductible and 80% coinsurance:

PriorityHRA reimbursement that works

  • Employee pays the first $500 of the employee pay first portion.
  • The employer (you) designate $2,500 in HRA dollars to be paid out to cover the rest of the deductible and then the coinsurance until the funds are exhausted.
  • In this case, the HRA is only "turned on and off" one time and takes care of both the deductible and coinsurance.

PriorityHRA reimbursement that doesn't work

  • Employee pays the first $500 of the employee pay first portion.
  • The employer (you) pay the remaining $1,500 of the deductible.
  • Employee pays the first $500 in coinsurance.
  • Employer pays $1,000 in coinsurance responsibility.

In this example, the HRA is turned on and off twice, once for the deductible and once for the coinsurance. That is not allowed. 

Other HRA reimbursement information

  • When an HRA reimburses for coinsurance, it pays for any claim that is a percentage, including in- or outpatient hospital claims, substance abuse treatment, durable medical equipment, prosthetics and orthotics, etc.
  • This means the HRA could pay for claims that don't apply toward the out-of-pocket maximum.
  • Groups with 100+ eligible employees can exclude services from HRA reimbursement and the member will still have coinsurance or deductible responsibility for those services. (This is called carving out).

In-network vs. out-of-network reimbursement

With PPO and POS plans, you have the option to set your HRA up to reimburse both in-network/preferred and out-of-network/alternate claims or only in-network/preferred. But our system doesn't differentiate between in-network and out-of-network claims.

Example: You can't pay out $1,000 in HRA dollars for in-network claims and $500 on out-of-network claims. You would have to put a total of $1,500 in the HRA "bucket" and the money could be used for both in- and out-of-network claims, or for only in-network claims if that's how you set it up.

Contact your sales representative or agent if you'd like to set your HRA up to reimburse both in-network/preferred and out-of-network/alternative claims.

Processing claims

Claims processing is all automatic with PriorityHRA. Here's how it works:

  1. An employee incurs a medical service that is HRA-eligible.
  2. The provider bills Priority Health.
  3. We apply the services to the HRA and health plan. If the HRA is supposed to make a payment, we mail a check directly to the provider.

You or your employees don't need to submit any paperwork requesting reimbursement.