Health Reimbursement Arrangement (HRA)
An employer-funded account that reimburses employees for qualified medical expenses and sometimes health insurance premiums.
What is Health Reimbursement Arrangement (HRA)?
A Health Reimbursement Arrangement (HRA) is an employer-funded account that reimburses employees tax-free for qualified medical expenses. Unlike HSAs and FSAs, employees don't contribute their own money - it's entirely funded by the employer.
HRAs come in several types. Traditional HRAs work alongside group health plans to cover out-of-pocket costs. Individual Coverage HRAs (ICHRAs) allow employers to reimburse employees for individual health insurance premiums. Qualified Small Employer HRAs (QSEHRAs) let small businesses provide tax-free health benefits without offering group coverage.
The employer sets the rules for what expenses are covered and how much is available. Some HRAs allow unused funds to roll over; others don't. Since the employer owns the account, any remaining balance typically stays with the employer when you leave the job.
Frequently Asked Questions
Do I contribute to an HRA?
No. HRAs are entirely employer-funded. You cannot contribute your own money to an HRA.
Can I have an HRA and HSA together?
It depends on the HRA type. You can have an HSA with a Limited Purpose HRA or Post-Deductible HRA, but not with a general-purpose HRA.
What happens to my HRA when I leave my job?
Usually the funds stay with your employer. Some employers may offer a grace period to submit claims for expenses incurred while employed.
Related Terms
Health Savings Account (HSA)
A tax-advantaged savings account for people with high-deductible health plans to pay for qualified medical expenses.
Flexible Spending Account (FSA)
An employer-sponsored account that lets you pay for eligible healthcare expenses with pre-tax dollars, typically with a use-it-or-lose-it rule.
Individual Coverage HRA (ICHRA)
An employer-funded account that reimburses employees for individual health insurance premiums and medical expenses.
Qualified Small Employer HRA (QSEHRA)
An HRA for small businesses that reimburses employees for individual health insurance and medical expenses.
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