Health reimbursement arrangements make it easy for employers to customize benefits for their employees. There are two main types of HRAs that make it possible to reimburse employees for qualified medical expenses in addition to health insurance premiums.
To recap, the QSEHRA is designed for employers with less than 50 employees to reimburse for premiums and medical expenses if the plan allows. The ICHRA is for companies of any size. There are no limits to how much an employer can offer for reimbursement.
Our portal makes it easy for employees to just snap a picture of their receipts for reimbursement. Employers have a lot of flexibility over what is reimbursed. Understanding the impact of these options can go a long way towards helping the employer achieve their objectives and keep their budget in check.
Here are a few choices employers can make:
- Reimburse Insurance Premiums Only: Employers can limit reimbursements to only go towards eligible premium expenses. Typically, this refers to individual health insurance premiums but could also include eligible dental premiums, vision premiums, etc. as long as the employee has Minimum Essential Coverage (MEC) for QSEHRA or a qualified health plan for ICHRA.
- Reimburse Insurance Premiums and Medical Expenses: Most employers choose to allow medical expenses to be reimbursed too. Note: Employers can choose to exclude categories of expenses (i.e., “prescriptions”) as long as the exclusion is applied fairly to everyone.
HRAs must follow guidelines set forth by IRS Publication 502, Medical and Dental Expenses. Below is an excerpt of what is included in the manual. This is not a comprehensive list but it is a great start to understanding what the IRS considers eligible as a medical expense for tax-free reimbursement.
What medical expenses are reimbursable through my HRA?
Over-the-counter medications and women's sanitary products are now tax-free with your HRA!
ELIGIBLE Medical Expenses
Abdominal supports • Abortion • Acupuncture • Air conditioner (when necessary for relief from difficulty in breathing) • Alcoholism treatment • Ambulance • Anesthetist • Arch supports • Artificial limbs • Athletic Braces and Supports • Autoette (when used for relief of sickness/disability) • Bandages • Baby Sunscreen • Baby Thermometers • Birth Control Pills (by prescription) • Blood Glucose Monitors and Test Strips • Blood Pressure Monitors • Blood tests • Blood transfusions • Braces • Breast Pumps and Accessories • Cardiographs • Children's First Aid • Children's Sunscreen • Chiropractor • Christian Science Practitioner • Condoms • Contact Lenses and Lens Solution • Contraceptive devices (by prescription) • Convalescent home (for medical treatment only) • Crutches • Dental Treatment • Dental X-rays • Dentures • Denture Cream and Cleansers • Dermatologist • Diabetes Care Accessories • Diagnostic fees • Diathermy • Drug addiction therapy • Drugs (prescription) • Elastic hosiery (prescription) • Eyeglasses • Eye Glass and Lens Accessories • Fees paid to health institute prescribed by a doctor • First Aid Kits • First Aid Treatment and Supplies • Fluoridation unit • Glucosamine Supplements • Glucose Tablets • Guide dog • Gum treatment • Gynecologist • Healing services • Hearing aids and batteries • Heating Pads and Wraps • Home Medical Equipment • Hospital bills • Hot and Cold Packs • Hydrotherapy • Incontinence Products • Insulin treatment • Lab tests • Lead paint removal • Legal fees • Lip Balm • Lodging (away from home for outpatient care) • Medical Monitoring and Testing Devices • Motion Sickness Aids • Metabolism tests • Nasal Spray • Neurologist • Nursing (including board and meals) • Obstetrician • Operating room costs • Ophthalmologist • Optician • Optometrist • Oral surgery • Organ transplant (including donor’s expenses) • Orthopedic and Surgical Supports • Orthopedist • Osteopath • Oxygen and oxygen equipment • Pediatrician • Physician • Physiotherapist • Podiatrist • Postnatal treatments • Practical nurse for medical services • Pregnancy and Fertility Tests • Prenatal care • Prenatal Vitamins • Prescription medicines • Psychiatrist • Psychoanalyst • Psychologist • Psychotherapy • Radium Therapy • Reading Glasses and Magnifiers • Registered nurse • Shoe Insoles and Inserts • Special school costs for the handicapped • Spinal fluid test • Splints • Sterilization • Sunscreen • Surgeon • Telephone or TV equipment to assist the hard-of-hearing • Therapy equipment • Thermometers • Transportation expenses (relative to health care) • Ultra-violet ray treatment • Vaccines • Vaporizers and Inhalers • Vasectomy • Vitamins (if prescribed) • Walking Aids • Wheelchairs and Accessories • X-rays
This list still has the potential to change, through advancements such as the CARES Act, which updated eligible medical expenses to includes over-the-counter drugs and products like tampons and pads.
Common Medical Expenses ELIGIBLE ONLY WITH A DOCTOR'S NOTE
These are some items that we commonly see submitted for reimbursement that require a doctor's Letter of Medical Necessity in order to be reimbursed:
- Acne treatments
- Air conditioner (when necessary for relief from difficulty inbreathing)
- Dietary Supplements
- Fiber supplements
- Medically necessary cosmetic surgery (breast reduction)
- Medicated shampoo & conditioner
- Orthopedic shoes
- Special school costs for treating disabilities
- Vitamins & supplements
- Weight loss programs
INELIGIBLE Medical Expenses
Similarly to those listed above, the items on this list are not considered eligible medical expenses.
- Advance payment for services scheduled for next year
- Athletic club membership
- Automobile insurance premiums
- Baby Powder
- Boarding school fees
- Bottled water
- Commuting expenses of a disabled person
- Cosmetic surgery and procedures
- Cosmetics (including face cream and moisturizer)
- Cosmetics, hygiene products, and similar items
- Cotton Swabs
- Dental Floss
- Diaper Pail Plastic Bags
- Funeral, cremation, or burial expenses
- Health programs offered by resort hotels, health clubs, and gyms
- Illegal operations and treatments
- Illegally procured drugs
- Marriage Counseling (all other mental health counseling eligible)
- Maternity clothes
- Premiums for life insurance, income protection, disability, loss of limbs/sight, or similar benefits
- Premiums for cash benefit indemnity plans
- Scientology counseling
- Shaving Cream
- Social activities
- Special foods and beverages
- Specially designed car for the handicapped other than an autoette or special equipment
- Stop-smoking programs
- Sunscreen and tanning lotion
- Swimming pool
- Travel for general health improvement
- Tuition and expenses for school where availability of medical care isn't the reason for attending
- Weight-loss drugs for general wellness
Take Command Health is here to help!
Chat with our team with any questions you may have about these tax-friendly benefits.