Health Reimbursement Arrangement

How an HRA works
The NueSynergy Health Reimbursement Arrangement (HRA) is an employer funded tax-advantaged account that can be designed to the specific needs of an employer and their employees. NueSynergy will work with employers and their agent or consultant to implement the HRA plan that helps the employer both manage their overall healthcare costs while providing employees with a benefit that assists them in paying their out-of-pocket medical expenses.



  • HRA contributions are not considered part of an employee's income. Therefore, any funds used by the employee are not subject to income, FICA or worker's compensation tax; however, they are tax deductible to the employer.
  • HRA funds do not have to be distributed until an expense is incurred.
  • Employers determine what expenses are eligible. (i.e. deductible, co-insurance, Rx)
  • Employers maintain the amount of funds to make available and when.



Each plan year, the employer will determine how much money to contribute to the HRA, set the threshold for when funds are available, as well as what expenses will be considered eligible for reimbursement. For example, an HRA could pay all eligible medical expenses, including deductible and co-insurance expenses, or the HRA could be limited to cover only dental or vision expenses.

Once eligible expenses are incurred the employee can access their HRA funds by:

  • Submitting an eClaims reimbursement through NueSynergy's carrier integration module
  • Submitting an online claim through the NueSynergy Member Portal
  • Submitting a paper claim via fax or mail
  • Using the NueSynergy Benefits debit card (based on plan design)



For employers with less than fifty (50) full-time employees: instead of offering a group insurance plan, they can allow employees to shop for an individual health insurance plan that best fits their unique needs while also helping employees to cover their monthly premium cost through an HRA.

Employers are able to provide reimbursement through the HRA up to $4,950 for individual plans and $10,000 for family plans per year. As with all HRA contributions, they are not subject to an employee's income, FICA or worker's compensation tax; however, they are tax deductible to the employer.

NueSynergy will work with the employer to manage the premium payment process, including facilitation of payment for any portion of the premium the employee may be responsible for that the HRA does not cover.



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Typically all benefit eligible employees can participate in an HRA.


Employers can also set additional eligibility rules for the HRA plan such as: 
  • Limiting eligibility to a particular health plan as long as they do not discriminate in favor of highly compensated employees.
  • Cover only employees or cover employees and their dependents, as well as domestic partners as long as they meet the IRS Section 152 definitions.
  • Provide coverage to retirees. 

(Note: Partners in a business, members of LLCs, and shareholders who own 2% or more in S-corporations, however are not eligible to participate in the HRA.)




There is no limit on the amount of money your employer can contribute to the HRA. Each year your employer may set the HRA limits based on the overall strategy and goals of the group health plan. Additionally, based on plan design, the maximum reimbursement amount credited under the HRA each year could be increased or decreased by amounts not used during a previous plan year.

         -  HRAs are funded solely by the employer.      

         -  Contributions are not included in the employee's income. 

         -  No federal income taxes or employment taxes on amounts your employer contributes to the HRA.



The Health Reimbursement Arrangement provides employers with enormous flexibility when determining the plan design that best fits their needs and budget. Below are just a few examples of plans designs an employer could implement for their group.                         


HRA Type HRA Description HRA Example
Employee Pay First The employee pays their employer-defined portion of the out of pocket expenses. Once met, the employer funded HRA is activated and used to pay the remaining portion of the health plan deductible.    

Employee: $400 | HRA: $800

Employer Pay First The employer funded HRA is used to pay the first portion of the health plan deductible, then the employee pays the remaining balance of deductible expenses. HRA: $200 | Employee: $600
Employer GAP HRA The employer HRA pays the first portion of deductible expenses up to a limit defined by the plan. Next the employee pays the remaining portion of the deductible expenses. The employer HRA is reactivated to reimburses a defined amount of co-insurance expenses after which the Employee is responsible for the remaining portion of their co-insurance up to the out-of pocket maximum.

Employee: $400 | HRA: $800 | Employee: $400 

Employee Gap HRA

The employee pays the first portion of deductible expenses up to a limit defined by the plan. Next the employer HRA pays the remaining portion of the deductible expenses. The employee is then responsible for a defined amount of their co-insurance expenses before the HRA is reactivated and can be used to reimburse the remaining portion of their co-insurance up to the out-of pocket maximum.

HRA: $400 | Employee: $800 | HRA: $400 
Percentage Based Reimbursement The employer HRA reimburses the employee a percentage of their out-of-pocket deductible costs up to the employer defined HRA maximum amount. Employee: $500 | HRA (75%) Employee (25%): $1,000 
Co-Pay Share The employer can set a specific dollar amount to reimburse for certain co-pays. Dr. Office: $25 | RX: $50 | ER Visit: $75 
Premium Reimbursement Employers with less than fifty (50) full time employees are able to provide reimbursement through the HRA up to $4,950 for individual plans and $10,000 for family plans per year to help their employees purchase individual health insurance plans that best fits their unique needs.

HRA (Individual) $4,950 | Employee (Individual): $1,050

Total Premium: $6,000

HRA (Family): $10,000 | Employee (Family): $2,000

Total Premium: $12,000






All “eligible employees” who received compensation during the previous year are included in nondiscrimination testing. Generally only union employees, non-resident aliens, leased employees and independent contractors can be excluded from nondiscrimination testing because they are not considered “eligible employees.”



Each year, the IRS requires companies with pre-tax reimbursement accounts to complete nondiscrimination testing. Nondiscrimination testing ensures that the business owners and Highly Compensated Employee(s) (HCE) do not receive a disproportionate benefit from a pre-tax plan compared to other employees.

When you participate in a payroll deduction program through your employer, deductions can be taken from your payroll before calculating your taxable federal income, FICA (Social Security and Medicare) tax and for most states, taxable state income. By taking deductions pre-tax, you reduce the dollars on which you are taxed and, as a result, reduce your total tax bill.

You will receive an email indicating the reason for the denial along with instructions for submitting the requested documentation.

Depending on your HRAs plan design that are two possible types of supporting documentation for HRA claims:
i. Explanation of Benefits (EOB):
Each time you submit claims to your health insurance carrier, you will receive this statement detailing what the health plan will pay and what you must pay. For expenses that are partially covered under another insurance plan, you must attach a copy of both of the EOBs.

ii. Itemized Bills:
For expenses that are not submitted to another insurance plan, you must attach a copy of an itemized billing containing the following information:
- Name of patient
- Name and address of provider
- Description of service
- Date of service
- Amount of service


On May 12, the Internal Revenue Service released Notice 2020-29 providing guidance to address:

In response to the March 13, 2020, National Emergency declaration, multiple agencies issued temporary guidance impacting benefit plan time frames.

The recently signed Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) gives healthcare consumers more savings opportunities for HSA, FSA and HRA benefit accounts. 

Forms and Guides

An example of the information needed within a Letter of Medical Necessity.

Step by step instructions for setting up direct deposit online for claim reimbursement.

eClaims Manager provides access to an employee’s claims data or explanation of benefits (EOBs), allowing increased auto-substantiation of debit card claims and easier electronic manual claim submission.

This guide provides you with step by step instructions on how to submit a claim online.

Release form enabling you to designate individuals that you authorize NueSynergy to release information to related to your benefit account.

Eligible Expenses

To see a complete Eligible Expenses Chart please go to the following link.

See All Eligible Expenses

eClaims Manager

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