When employers first set up a health reimbursement arrangement (HRA), they often wonder if there’s a required timeframe for reimbursing their employees’ health expenses. Likewise, employees want to know how long they have before they need to submit their health expenses for approval.
As a rule of thumb, reimbursement deadlines are defined by the HRA plan documents you draft when you first set up the benefit. However, to save you the trouble, we’ve rounded up a few of the most important deadlines you’ll need to pay attention to in order to stay on top of your organization’s HRA.
The four main deadlines for your HRA that we’ll cover are:
- The reimbursement deadline for employers
- The expense submission deadline for eligible employees
- The expense submission deadline for newly ineligible employees
- The reimbursement deadline for after the plan year ends
Reimbursement deadlines for employers
An HRA must have formal plan documents in order to qualify for tax advantages. These plan documents set forth HRA timing rules, including the deadline for employers to pay their employees’ back for the qualifying medical expenses they’ve submitted for reimbursement.
During the normal life of the plan, organizations usually must reimburse an expense within 90 days of approval.
The life of the plan, also known as a benefit year, is based on the specific length of time an organization set up their plan to run for. This date range is also included in the plan documents.
A typical benefit year spans 12 months, but it can be shorter or longer depending on how you choose to set up your HRA. For example, an organization may set up its first benefit year to run from August through December, and then make subsequent years run from January to December.
Expense submission deadlines for eligible employees
Typically, eligible employees can submit expenses for reimbursement anytime during the benefit year.
For example, if the benefit year begins in January and ends in December, employees can submit expenses through the end of December (and perhaps 90 days beyond that if the plan includes a runout period—more on that later).
It’s a good habit for employees to submit expenses shortly after they incur them, mostly because the plan document requires employees to submit formal documentation or proof of their expenses (like an invoice, explanation of benefits, or a receipt) along with their reimbursement request.
The longer your employee waits to submit their expense, the more likely they are to lose track of their receipt or written proof of their expense. Without any kind of proof, they won’t be able to get their purchases reimbursed.
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 deadline.
As an employer, it’s a good idea to communicate early and often when deadlines for submitting health expenses for reimbursement are coming up. That way your employees don’t miss out on using their HRA to the fullest.
Expense submission deadlines for newly ineligible employees
In some cases, organizations must reimburse expenses after an employee becomes ineligible for benefits.
An employee may lose plan eligibility for a number of reasons, including:
- Leaving the organization voluntarily
- Being terminated by their employer
- Having a change in insurance status
Whatever the reason, employees have 90 days after they lose eligibility to submit expenses for reimbursement.
However, in order to qualify for reimbursement, the employee must have incurred the expense during the time they were still eligible for the HRA.
Reimbursement deadlines for after the plan year ends
Finally, there are also deadlines in place for employers to reimburse expenses after the plan year ends.
Similar to the rule put in place when an employee loses eligibility, employees have 90 days to submit expenses for reimbursement after a benefit year ends.
An employee must have incurred the expense during the benefit year in order to qualify for reimbursements.
Depending on the plan documents, the organization may allow a grace period, also known as a runout period, for reimbursements. For example, it might extend its health reimbursement deadline by 90 days past the benefit year—giving employees a 90-day runout period in which they can still submit expenses.
Need help keeping track of deadlines?
If you use an administrative support software like PeopleKeep, you and your employees don’t have to keep track of these HRA deadlines on your own. PeopleKeep helps thousands of organizations keep track of reimbursement requests, juggle deadlines, and even send out automatic reminders so you don’t have to.
What’s more, you’ll have access to our award-winning customer support team whenever you or your employees have questions about which health expenses qualify, when deadlines are coming up, or anything in between.
An HRA is a great way for organizations to offer a personalized and flexible health benefit to their employees—but it’s your job to make sure important deadlines don’t pass you by. With the help of PeopleKeep’s administrative support software, you can take a backseat while our software and customer support team does all the heavy lifting.
This article was originally published on April 26, 2018. It was last updated April 26, 2021.