HealthInvest HRA is a great way to save up for out-of-pocket medical expenses, including retiree insurance premiums. It’s super easy to use, and it helps you save money by paying less in taxes.
Gallagher is one of the nation’s leading developers of health reimbursement arrangement (HRA) platforms. It all started more than 30 years ago when a retired school administrator expressed concern over the cost of his retiree medical insurance. This led to our development of the nation’s first multiple-employer HRA program for public employees. Today, we serve over 150,000 HRA participants from more than 1,100 employers.
Here’s how it works:
- Your employer sends money to your HRA.
- You invest those funds.
- You use your HRA to reimburse medical expenses now or later.
Please read the Plan Summary/Summary Plan Description for more details. To get a current copy, log in and click Resources.
Health Reimbursement Arrangement
An HRA is a type of health plan that puts you in control. It’s a savings account for your family’s medical care expenses and premiums. The money comes from your employer. Depending on your employer’s plan design, you can begin spending your HRA right away or save it up until you meet certain eligibility requirements, such as separation from service or retirement.
You get to invest your HRA by choosing from a menu of available investment funds. To get a current copy of the Investment Fund Overview for your plan, log in and click Resources.
Keep More for Yourself
Here’s the really neat part: Your HRA is exempt from payroll taxes. Payroll taxes include federal income tax, FICA taxes (Social Security and Medicare), and state income tax, if applicable (state income tax may apply in some states). You pay no taxes on contributions, investment earnings, or medical care expense reimbursements (claims). Money goes in tax-free, is invested tax-free, and comes out tax-free. That’s the best tax advantage you can get—even better than tax-deferred programs like 457, 401(k), or 403(b) plans!
This is kind of technical, but don’t worry! The point is that HealthInvest HRA offers several advantages over other types of medical expense accounts, such as health savings accounts (HSAs) and flexible spending accounts (FSAs).
- Use any health plan—no high-deductible health plan (HDHP) required
- No IRS contribution limits
- Other coverage doesn’t impact contribution eligibility
- Reimburses medical premiums before and after age 65, including Medicare and Medicare supplement premiums
- Unused balances carry over—no annual “use-it-or-lose-it”
In addition, HealthInvest HRA can provide many other benefits.
- Significant tax savings
- Participant-directed investments, similar to your 457, 401(k), or 403(b) plan
- Spouse and qualified dependents are covered—even if you pass away
Common Medical Care Expenses
The growing cost of health care is a huge concern for most active employees and retirees. Insurance premiums, copays, and deductibles are on the rise. Coverage levels are dropping, and the cost of medical care keeps going up. As these problems worsen, employees struggle to cope. Many are working past retirement age because they can’t afford $1,000 per month or more for medical insurance.
Fortunately, with HealthInvest HRA, you can save up a tax-free source of funds to help cover your out-of-pocket medical care expenses either now or during retirement, depending on your employer’s plan design. There are lots of different types of qualified medical care expense. Several of the most common are listed below.
- Preventive care
- Laser eye surgery
- Retiree insurance premiums (medical, dental, vision)
- Medicare Part B
- Medicare Part D
- Medicare supplement
- Tax-qualified long-term care (subject to IRS limits)
Internal Revenue Code Section 213(d) outlines qualified medical care expenses and premiums. For quick reference, read our Qualified Expenses & Premiums handout. To get a copy, log in and click Resources.
Common HRA Funding Sources
In many cases, your employer will contribute certain funds that would otherwise be paid to you as taxable income. Your employer may also provide contributions in connection with creative employee benefits goals and initiatives. Several of the most common types of HRA funding sources are listed below.
- Unused leave cash-outs (annually, at separation, or retirement)
- Mandatory employee contributions (group salary reduction)
- Direct employer contributions (to help offset increased medical costs for employees)
- Excess or leftover benefit dollars
- Financial incentive to:
- Enroll in lower-cost medical plan
- Opt out of employer-sponsored medical plan
- Participate in wellness plan activities
- Retire early
Eligibility and funding sources are usually defined in writing within collective bargaining agreements, employer policies, etc. You should check with your employer, union, or employee group leadership if you have questions about what HRA funding sources may apply to you. Keep in mind that IRS rules do not permit individual elections. All employee group members defined as eligible must participate.
Arthur J. Gallagher & Co.
Gallagher is one of the nation’s leading developers of HRA platforms. We’ve been helping governmental employers set up and administer medical care reimbursement programs since 1984. Today, we help governmental, Taft-Hartley, and nonprofit groups throughout the country set up and administer medical care reimbursement programs for thousands of employees and retirees. Our clients’ plans have grown to cover nearly 150,000 HRA participants from more than 1,100 employers with over $1 billion in HRA assets.
Why choose us? We employ a highly skilled team of experts whose sole focus is funded HRAs. We are not your typical TPA or retirement plan provider trying to sell a sideline HRA product. We are very comfortable in the health and welfare benefits space. Our proven expertise in this area sets us apart.
GBS is a wholly-owned subsidiary of Arthur J. Gallagher & Co. (AJG). GBS is a Delaware corporation with its executive offices located in Itasca, Illinois. Founded in 1927, AJG is one of the world’s largest insurance and risk management firms with more than 250 branches across 100+ countries. AJG has been publicly traded on the New York Stock Exchange (NYSE: AJG) since 1984.