When companies first set up a health reimbursement arrangement (HRA), they often wonder if there is a specific (or required) time frame for reimbursing employees’ health expenses. Likewise, employees want to know how long they have to get their health expenses paid.
As a rule of thumb, health insurance reimbursement deadlines are defined by the HRA plan documents.
Reimbursements during the normal life of the plan
An HRA must have formal plan documents to qualify for tax advantages. These plan documents set forth the health insurance reimbursement deadline, among other plan requirements. In most cases, companies must reimburse an expense within 90 days of approval.
Businesses set up their plans to run for a specific length of time called a benefit year. This date range is included in the plan documents.
A typical benefit year spans 12 months, but it can be shorter or longer depending on how the business sets up its HRA. For example, a company may set up its first benefit year to run from August through December, and then make subsequent years run from January to December.
Reimbursements during the 90-day runout period
In some cases, companies must reimburse expenses after an employee becomes ineligible for benefits or during the runout period after the plan ends.
After a benefit year ends or an employee loses plan eligibility (if they leave the company, are fired, or no longer qualify) they have 90 days to submit expenses for reimbursement. To qualify for reimbursement, the employee must have incurred the expense during the benefit year or during the time their expense was eligible for approval.
Depending on the plan documents, the company may allow a grace period for reimbursements. For example, it might extend its health insurance reimbursement deadline by 90 days past the benefit year—giving employees a 90-day runout period in which they can still submit expenses.
Expense submission deadlines for employees
It’s also common for employees to wonder how long they can wait to submit an expense for reimbursement. Again, the plan document spells out health insurance reimbursement deadlines.
Typically, employees can submit expenses anytime during the benefit year. For example, if the benefit year begins in January and ends in December, they can submit expenses through December and perhaps 90 days beyond if the plan includes a runout period.
The plan document also specifies what types of information an employee must submit along with the expense. This can be an invoice, an explanation of benefits, or some other form of documentation.
It’s a good habit for employees to submit expenses shortly after they incur them. Depending on the type of HRA, any money left in the account might expire at the end of the benefit year, meaning employees lose out on their benefit if they miss the health insurance reimbursement deadline.
An HRA is a great way for companies to offer personalized health benefits.