A lot of Americans do not have health insurance, but even those who do have plans are looking for ways to save money by reducing or eliminating the amount of their deductibleI recently went to the doctor for a minor ailment. Not having an office visit co-pay on my high deductible insurance plan, and not having yet met my annual $2,250 deductible, I had to pay the entire cost of the visit at the time of service. I gave them a check for $82.50. Two weeks later, I received a check in the mail for the same $82.50, essentially making my doctor’s office visit free of charge. Sounds great, huh? How did I accomplish this?

You see, my employer has a Health Reimbursement Arrangement(HRA) in place. First, he purchased a group high deductible health plan from a major insurance carrier in South Carolina. Then, he also put in place a Health Reimbursement Arrangement, which allows him to reimburse his employees for 100 for those charges, up to the limit the employer has set.

The employer is not required to prepay into a fund for the reimbursements. He usually sets up a separate account and pays the reimbursements as each claim occurs. The reimbursements are tax-deductible for the employer, and the reimbursements the employees receive are also tax free as long as they are tied to qualified health care expenses. At the employer’s discretion, if an employee does not use his/her entire HRA fund in a given year, the remainder can roll over into the next year’s fund.

With an HRA, you simply go to the doctor, hospital or pharmacy, and pay the estimated cost (sometimes, providers will even give you a discounted price knowing that you are on a high deductible plan and having to pay 100 of the amount you spent at the provider, up to your annual HRA fund limit.

It’s a win-win situation…..the employer wins because by installing the High Deductible Plan, he saves up to 40-80 paid medical care through the HRA arrangement (up to his/her annual limit). Not a bad idea!