How We Got Here: A timeline of tax-free health care

Basics


1970s – Health reimbursement accounts are developed to offset rising health care costs

One of the earliest forms of consumer-directed health care is the health reimbursement arrangement (HRA), also known as a health reimbursement account, which attempted to work around these rising costs. HRAs were conceived as a grand bargain between employers and employees to offset the growing cost of health coverage. HRAs are set up by the employer, and the employer contributes a specified amount to each participant's HRA.

Employees can use these funds for qualifying products and services. HRA plan structure was largely left up to the employer, but they would typically cover deductibles, copayments and coinsurance payments to provide financial relief for employees.

Reimbursement payments through an HRA for medical expenses was a step in the right direction -- employers got additional tax relief and employees had more money to spend on qualified health expenses. But the tax relief was significantly greater for employers.










Latest
Get the most out of your FSA with our exclusive deals and tips. Subscribe today!