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What Are the Disadvantages of HRA Insurance?

The next time open enrollment season rolls around, your employer may offer you a high deductible health plan combined with a health reimbursement arrangement. This type of consumer-driven health care plan is designed to encourage employees to make smart choices when they go to the doctor and buy prescription and non-prescription drugs. But while these plans certainly have their place, they have some distinct disadvantages as well.

  1. High Deductible

    • To take advantage of a health reimbursement account, you must select a high deductible health plan, or HDHP, from the list of options your employer provides. Selecting a high deductible plan means that you will be responsible for the first few thousand dollars of health care expenses each year, and the health plan will kick in only after that deductible is satisfied. The HRA may cover some of that deductible, but it may not be enough to cover the entire amount.

    Not Portable

    • Another significant drawback of a health reimbursement arrangement (HRA) is that it is not portable. Unlike a 401k plan, you cannot carry your HRA account with you when you change jobs. If you plan to change jobs, you can exhaust as much of your HRA as possible, but you cannot take any remaining funds with you. In addition, you can keep the money in your HRA and roll it over to the next year only if you continue to opt for a high deductible plan. If you choose a different type of health plan, you could lose the remaining funds in your HRA.

    Spending Restrictions

    • While a health reimbursement account is designed to provide you with the money you need to make medically necessary purchases, not everything is covered. Things like prescription drugs and vitamin supplements may not be covered unless they are accompanied by a prescription or specific order from your doctor. Before you make any purchases you expect to be reimbursed through your HRA, you should first contact the insurance company to ensure that those purchases are acceptable under your plan.

    Complicated Paperwork

    • When you go to the doctor or purchase a prescription, you may receive an automatic reimbursement for your deductible through the HRA. But when you make other medical purchases, like buying a pair of prescription eyeglasses or contact lenses, you will be responsible for submitting the reimbursement form. That means logging on to the insurance company website, downloading and completing the reimbursement request and submitting it to the insurance company.

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