What is the difference between an HRA and HMO?

Asked by: Adolphus Rau  |  Last update: February 11, 2022
Score: 4.9/5 (29 votes)

The HMO and HRA plan options use the same exact network, but a key difference is that with the HMO plan, you must use in-network providers to receive coverage, while the HRA plans offer coverage for both in- and out-of-network providers.

Is an HRA better than an HMO?

The bottom line is that generally a plan with an HRA is going to have higher out of pocket costs and require more leg work for reimbursement but lower premiums. an HMO with low out of pocket costs will have higher premiums. Each persons choice for health plan depends on their personal situation and overall health.

Is HMO an HRA?

Your Kaiser Permanente Deductible HMO Plan with a health reimbursement arrangement (HRA) is not just health coverage — it's a partnership in health. You receive preventive care services at little or no cost to you, and online features let you manage most of your care around the clock.

What is a HRA health plan?

Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the arrangement.

Is HRA the same as health insurance?

A Health Reimbursement Arrangement (HRA) isn't traditional health coverage through a job. Your employer contributes a certain amount to the HRA. You use the money to pay for qualifying medical expenses. For some types of HRA, you can also use the money to pay monthly premiums for a health plan you buy yourself.

What's an HSA? HRA? FSA?

26 related questions found

Are HRA Plans good?

An HRA plan is an excellent way to provide health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance.

Who should get an HRA?

Generally, employers of any size can offer an individual coverage HRA, as long as they have one employee who isn't a self-employed owner or the spouse of a self-employed owner. HRAs are only for employees, not self-employed individuals.

What can a HRA be used for?

HRAs can be used to pay for qualified medical expenses, which include prescription medications, insulin, an annual physical exam, crutches, birth control pills, meals paid for while receiving treatment at a medical facility, care from a psychologist or psychiatrist, substance abuse treatment, transportation costs ...

Is HRA use it or lose it?

An HRA is a type of healthcare account, funded entirely by your employer; employees cannot contribute to an HRA. ... Per IRS guidelines, all medical expenses paid for with HRA funds must be substantiated. In general, HRAs have no "use-it-or-lose it" policy.

Why would an employer offer an HRA?

Health reimbursement arrangements (HRAs) are benefits that some employers offer their employees to help with healthcare expenses. They're a way for companies to reimburse workers for these costs, and reimbursements are generally tax-free when used for qualified medical expenses.

Can I use HRA for copay?

Your employees can use it to help pay for eligible medical expenses. Money from the HRA helps them pay their health plan deductibles, coinsurance and copayments. Money they don't use may be carried over to the next year and used for future medical costs, if you allow it.

Is an HRA the same as a PPO?

What is an HRA? ... HRAs are most often paired with PPO plans that have a high deductible, allowing you to pay for part of the deductible on behalf of your employees. In addition, at your discretion, money left over at the end of each year can be rolled over to the next year.

Can I use my HRA for dental?

You can use the funds in your HRA to pay for eligible medical expenses, as determined by the IRS and your employer. ... Some employers may also let you use funds in the account to pay for dental, vision or other services. Some of the more common expenses that HRAs can help pay for include: Monthly premium payments.

Is there a downside to HRA?

One con for employees is that because HRAs are employer-funded, the employer owns the money in the account though it is there for the individual to use. If the person leaves the company or the job is terminated, the HRA money stays behind with the employer.

What are the disadvantages of an HRA?

Potential Disadvantages to Using Health Reimbursement Account
  • 1) HRA Plan Setup. The first potential issue is actually setting up the HRA plan properly. ...
  • 2) Substantiation Requirements. ...
  • 3) Additional paperwork and ID Cards. ...
  • 4) First year claims exposure. ...
  • 5) Cash Flow Issues. ...
  • 6) Employee Complaints. ...
  • 7) Eligible Employees.

Can an HMO be a high deductible health plan?

Yes! An HDHP can be an HMO If it meets certain parameters. No matter if you are actively reviewing your health insurance plan options during open enrollment or just getting a refresher in your health insurance knowledge, we have the comparison you need.

What expenses are covered by HRA?

What could be an HRA eligible expense?
  • Coinsurance and deductible expenses. These are both related to your insurance. ...
  • Dental & vision care. If you have a Limited HRA, expenses related to these two categories will be the only ones eligible. ...
  • Specialists or alternative medicine. ...
  • Prescription drugs and OTC items.

What happens to my HRA when I retire?

With a Retiree HRA, funds are deposited in a lump sum upon retirement/separation of service. The funds are invested once deposited and can be used immediately upon deposit.

What happens to money left in HRA?

Unused HRA money stays with the company. HRA money can be used to pay for family medical expenses.

Is hand sanitizer covered by HSA?

Health savings account (HSA) participants may use the funds in their HSA to pay for masks, hand sanitizer, and sanitizing wipes on a pre-tax basis. Sponsors of flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) may also allow these expenses to be reimbursed from their plans.

Can I buy tampons with HRA?

Tampons are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), and a health reimbursement arrangement (HRA). Tampons are not eligible with a limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA).

Can I buy groceries with my HSA card?

Yes! You can use your Health Savings Account (HSA) or Flexible Spending Account (FSA) to purchase any Ready, Set, Food!

Can I withdraw money from my HRA account?

You can't cash out your HRA.

Unused HRA funds are either rolled over to be available for eligible expenses the following year or retained by your employer — and your employer can decide which of these options to allow. But you can never choose to withdrawal HRA money for unapproved use.

Do you get a debit card with an HRA?

The debit card with access to an HRA is a convenient option your employer may offer to you. The debit card allows you to access the funds in your account without having to complete and file forms. You can use the card whenever you incur an eligible expense at a qualified provider.

What is the 2020 HRA limit?

Every year, the IRS outlines these annual contribution limits through a revenue procedure. In 2020, small businesses may offer up to $5,250 per self-only employee and up to $10,600 per employee with a family.