Understanding HRA Payment in Medical Billing: A Complete Guide

A Health Reimbursement Arrangement (HRA) is neither a payment account nor an insurance plan. Employees get health benefits from the employer, which cover medical expenses. The employer sets a specific amount to reimburse the employee’s provider for the medical services rendered. In addition, it is crucial to ensure the employee’s eligibility for HRA payment in medical billing and to receive timely reimbursement. Many healthcare providers are now outsourcing medical billing services to revenue cycle management specialists and streamline their collections.

What is HRA Payment in Medical Billing?

HRA is a Health Reimbursement Arrangement plan for the employee’s medical expenses. The employer sets the specific amount for the health plan to cover the out-of-pocket costs. Similarly, health funds are also used for the employees’ dependents, such as spouses, parents, and children. HRA is a fund that an employee cannot withdraw in advance and can only use for medical payments. In addition, these HRA payments are free of taxes, and the employees. Federal income tax does not apply to HRA payments.

Types of HRA Payments in Medical Billing

Individual Coverage HRA (ICHRA)

It is an individual health plan in which the employer decides a specific amount to reimburse the medical expenses. This HRA payment in medical billing plan includes medical premiums, out-of-pocket costs, dental, and vision costs.

Qualified Small Employer HRA (QSEHRA)

Qualified Small Employer HRA is a health plan designed for smaller medical organizations. Likewise, medical practices having fewer than 50 employees are eligible for QSEHRA. Similarly, it covers the minimum essential coverage (MEC).

Group Coverage HRA (GCHRA)

Group Coverage HRA is applicable when the employee participates in the Group Health plan. It has no annual limit. In addition, the renewal of the plan depends on the type of health plan the employer sets for the employees.

Working of HRA Payment in Medical Billing

Employer-Funded HRA to Healthcare Providers

The employer funds the medical expenses for qualified treatment. Each eligible employee receives a fixed standard amount of money. In some cases, where direct payment options are available, the provider receives money directly from the HRA, and in others, the insurance plan covers the amount.

Automatic Claim Submission and Payment Process

In some cases, the HRA payments get direct approval. It happens when a patient visits the in-network provider and pharmacies. Similarly, the in-network provider can directly claim reimbursement from the HRA payments in medical billing.

Application of HRA Funds to Deductibles, Copayments, and Coinsurance

A patient who visits an out-of-network provider must pay the treatment costs for the services rendered. After that, the patient applies to the employer with all the medical prescriptions as evidence. Hence, the employer reimburses the employee accordingly. It covers employee payments that the payer doesn’t reimburse, such as deductibles, copayments, and coinsurance.

ATM Card Usage for Direct Reimbursements in HRA Payments

Some employers provide their employees with a health insurance payment card. After visiting the hospital, the employee can cover the medical expenses directly at the point of care. In addition, it helps providers receive direct reimbursement without waiting to submit a claim.

How is HRA Payment in Medical Billing Beneficial?

The following are the benefits of receiving employer-funded medical expenses:

It is a tax-free health plan for employees and employers.
It helps providers receive direct payments without submitting a claim.
The health plan can be customized depending on the medical necessity.
Streamlined billing operations enhance patient satisfaction.
Employers can change the reimbursement rates under specific circumstances.
The unused funds can be utilized in the coming year, depending on the insurance plan. It’s not like the funds are limited to one year’s use only.

Conclusion

An employer offers tax-free health benefits to its employees under a Health Reimbursement Arrangement. Likewise, the plan is customizable, but has a payment limit that the employer sets. In addition, a provider can directly receive payments from the office if direct payment options are available. HRA in medical billing is not a pre-funded payment, but is reimbursed after the treatment.