Tips for Filing Claims with an HRA Medical Spending Account

A health reimbursement arrangement (HRA) is a type of medical spending account that sounds simple on the surface. Employers use HRAs to reimburse employees for out-of-pocket health expenses and/or monthly premiums. Employees don’t contribute any of their own money and they don’t pay taxes on funds their employer puts in. 

Where things get more complex is accessing the money. The HRA is owned and funded by the employer. The expenses eligible for reimbursement are determined by the employer. Employees must not only pay attention to what is an approved medical expense, they must also be careful about gathering receipts and other documentation, so they can file claims for reimbursement. 

In this article, we’ll discuss how HRAs work and give you some tips to help you get reimbursed, if you have an HRA.

How HRAs Work

Unlike a health savings account (HSA) or a flexible spending account (FSA), where employees are allowed to contribute money, employees can’t contribute to an HRA. The employer decides how much to put into the HRA each year, and it also determines if unspent funds roll over into the next year. 

When an employee leaves the company, they can’t take the money that’s in an HRA with them – it stays with the employer.

The amount the employer puts into the HRA is not considered taxable income. Employees also don’t pay taxes on the reimbursements they receive. The federal government sets limits on how much can be reimbursed each year through an HRA tax-free.

Getting Reimbursed

Expenses reimbursed through an HRA must be an Internal Revenue Service (IRS) qualified medical expense, which are listed in Publication 502. But the employer can use a narrower list, if it wants to. For example, the IRS says that acupuncture is an acceptable medical expense, but an employer may decide it won’t pay for that type of treatment. If you have an HRA, it’s very important to find out from your employer which specific expenses are reimbursable through the HRA.

How employees are reimbursed for out-of-pocket expenses is up to the employer. Some employers require that employees pay up-front with their own money, and then submit a claim with a receipt or other documentation to get reimbursed. Other employers may provide a debit card linked to the HRA, so employees don’t have to lay out their own cash. Sometimes employers will choose to pay a provider directly.

Documentation Requirements

No matter how the money flows, you should always have these key pieces of information on a receipt or other document to prove that the HRA expense is eligible to be paid or reimbursed.

• Provider name. The name of the doctor, clinic, or hospital that provided the care must be on the documentation. The provider’s address and phone number should also be there. If you purchased an item or picked up a prescription, the name of the store or pharmacy must be on the receipt.
• Date of service or purchase. This is the day that the medical service was performed or the item was purchased. It is not the billing date.
• Recipient of service. The full name of the person who received the service must be on the documentation. The recipient may be listed as the patient.
• Service or item provided. Receipts or documentation must include a description of the service provided or the item received. For some services or items, employers may require additional documentation, such as a letter from the doctor stating why the service or item was medically necessary.
• Amount paid. Receipts or other documents must show what the service or item cost. Because an employee can only be reimbursed for out-of-pocket expenses, the documentation should also show amounts the employee is responsible for, such as a copayment. If a payment was made, that should be shown.

If a receipt doesn’t show all of the necessary information, your reimbursement claim may be denied by your employer or the HRA’s administrator. Checking for this essential information before submitting your claim will help make sure it’s processed as quickly as possible.  

If you have one of our health plans, the summary of health plan payments (SHPP) available online in our Member Resource Center can be very helpful in satisfying your HRA’s documentation requirements. If you haven't already registered to use the Member Resource Center or member portal, you can do that online with your member ID card.

The IRS does require employers to make sure that an HRA is only being used for qualified medical expenses. You should always obtain and keep receipts and other documentation for the services you’ve received and the items you’ve purchased. Even if you don’t have to file a reimbursement claim, such as when you use a debit card, your employer may ask for the documentation later. 

Get Answers

HRAs can be a valuable employment benefit, as they help pay for medical services and products with tax-free money. We hope this article provided you with a better understanding of how HRAs generally work. Because HRAs are very customizable by employers, you should learn the specifics of how your company’s HRA functions. If you have questions, we encourage you to get answers from your employer’s human resources department or the HRA’s administrator.