Say you signed up for employer-sponsored health insurance that had a deductible and co-insurance costs and you received medical care that cost you $1,500 out-of-pocket. If your employer puts $750 into an HRA for you, the HRA might pay the first $750 of those out-of-pocket costs for you. You pay the remaining $750 for the care you received.
The circumstances when the HRA pays out depends on how your plan is structured.
For some plans, the HRA pays as soon as you incur out-of-pocket expenses and continues paying until funds are gone. Then, you’re responsible for covering additional coinsurance or other out-of-pocket costs. That’s like the example described above.
In other plans, you pay first until you’ve spent a set amount. Then, your employer pays until you exhaust your HSA funds. If you had this type of plan and incurred $1,500 in out-of-pocket expenses, your employer might require you to pay the first $500. Then, the employer would pay the next $750 and you’d pay the remaining $250.