Zane Benefits Publishes New Information on HRA Distributions

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Information on HRA Distributions. How distributions from HRAs work for the employer and employees.

Today, Zane Benefits, the online alternative to group health insurance, published new information on HRA distributions.

According to Zane Benefits’ website, distributions from an HRA are simple, but there are IRS guidelines that the employer and employees must follow. An HRA is an IRS-approved, employer-funded plan used to reimburse employees for medical expenses, it is not health insurance, but can be used to supplement health insurance benefits and pay for a range of medical expenses not covered by insurance, including many insurance premiums.

To understand how HRA distributions work, first it's important to understand the basic definition of an HRA. According to IRS Publication 969:

-"A health reimbursement arrangement (HRA) must be funded solely by an employer.”

-The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee.

-Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period.

-An HRA may be offered with other health plans, including FSAs.

-Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for HRAs on participant's income tax return."

-HRAs are notional arrangements, meaning pre-funding of third-party bank accounts is not required.

According to the IRS, distributions from an HRA:

-Must be paid to reimburse employees for qualified medical expenses they have incurred.

-The expense must have been incurred on or after the date the employee was enrolled in the HRA.

-If an HRA Debit card is used (not recommended), the card must meet certain substantiation methods and meet IRS guidelines detailed in Revenue Ruling 2003-43.

-If any distribution is, or can be, made for other than the reimbursement of qualified medical expenses, distributions made in the current tax year are included in gross income.

Click here to read the full article.

About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHRA") for Health Reimbursement Arrangements (HRAs) and defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, visit

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Christina Merhar
Zane Benefits
800-391-9209 6725
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