What Is a Health Reimbursement Arrangement (HRA)?

A Health Reimbursement Arrangement (HRA) is a taxpayer-funded benefit that reimburses KESD employees for eligible out-of-pocket healthcare expenses, including deductibles, prescription costs, copayments, and coinsurance.

Unlike a traditional savings account, an HRA is funded entirely by the school district using public funds. Employees do not contribute to the HRA, and reimbursements for qualified medical expenses are generally tax-free, providing an additional financial benefit.

For KESD employees, as well as eligible public school employees throughout Vermont, HRAs help pay medical expenses that would otherwise be the employee's responsibility.

The important distinction is who pays. Although these benefits are established through statewide negotiations, school districts fund them using public money, including revenue from property taxpayers.

Who Receives These Benefits?

Health Reimbursement Arrangements are not limited to classroom teachers. Vermont's statewide school employee health-benefit system covers teachers, licensed administrators, eligible non-licensed support staff, and other qualifying school employees.

Vermont law defines which non-licensed support staff are covered. See 21 V.S.A. § 1722 — Definitions

Superintendents are exempt from statewide health-benefit bargaining. However, they may still receive employer-funded healthcare benefits through their individual employment contracts.

Breaking Down the Math

How much of a school employee's out-of-pocket healthcare costs can be paid with taxpayer-funded benefits?

Under Vermont's statewide school employee health-benefit agreements, eligible employees receive taxpayer-funded Health Reimbursement Arrangements (HRAs) to help cover medical and prescription expenses.

For Calendar Year 2027, the HRA funding amounts are:

What Does This Mean for Employees?

These are the maximum amounts available through the HRA. How much is actually used depends on each employee's healthcare needs.

Consider the VEHI Gold Consumer-Directed Health Plan (CDHP).

Under this plan, the maximum combined medical and prescription out-of-pocket exposure is $2,500 for single coverage and $5,000 for all other coverage tiers.

After accounting for taxpayer-funded HRA benefits, the maximum remaining exposure is:

Here's a simple example:

A teacher with single coverage incurs $1,500 in eligible out-of-pocket medical expenses during the year.

Because taxpayers fund an HRA that provides up to $1,900 in first-dollar coverage, the entire $1,500 could be reimbursed, assuming sufficient HRA funds remain available.

The employee pays $0 toward those expenses. The taxpayer-funded HRA covers the entire $1,500.

The employee would begin paying eligible expenses after the available HRA funding is exhausted.

These benefits are funded with public money, including property tax revenue.

How Did These Benefits Become Mandatory?

These healthcare benefits didn't simply appear as a state mandate that nobody asked for. Quite the contrary. They came about through statewide negotiations between union representatives of school employees and school boards.

The first statewide agreement was decided through binding arbitration, with the arbitrator selecting the union-backed proposal over the school boards' proposal.

Under Vermont law, when statewide negotiations reach binding arbitration, the arbitrator must choose one side's final offer in its entirety. The arbitrator cannot combine parts of the competing proposals to reach a compromise.

The resulting agreement is binding on school districts across Vermont, with taxpayers ultimately responsible for funding these benefits.

See 16 V.S.A. § 2105 — Dispute Resolution

A Question of Fairness

A good education is important. So is providing school employees with reasonable healthcare benefits.

But what about the taxpayers who pay for them?

Across the Northeast Kingdom, homeowners, working families, and seniors on fixed incomes are struggling with rising property taxes and their own healthcare expenses. Many must pay substantial deductibles, copayments, and prescription costs out of their own pockets.

Meanwhile, Vermont's school employee health-benefit agreements provide taxpayer-funded HRAs that can cover thousands of dollars in eligible medical expenses before employees begin paying those costs themselves.

These benefits are established through statewide negotiations, but the financial responsibility ultimately falls on the public.

When taxpayers are struggling to afford their own healthcare and property taxes, is it reasonable to require them to fund healthcare benefits that may be substantially more generous than their own?

It's a question worth asking.