Health Reimbursement Arrangement (HRA)
An employer-funded, employer-owned account reimbursing employees' qualified medical expenses tax-free, often paired with HDHPs, with no employee contribution.
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Practice This Concept
Which statement correctly describes a health reimbursement arrangement (HRA)?
It is funded solely by employer contributions, and unused employer amounts generally revert to the employer at the end of the plan year or when employment ends — A health reimbursement arrangement (HRA) is an employer-funded account used to reimburse employees for qualified medical expenses. Because the money comes from the employer, the HRA belongs to the employer: unused balances generally revert to the employer at the end of the plan year or when the employee leaves the job, and the account is not portable. This is the fundamental contrast with an HSA, which is owned by the individual and travels with the employee. The exam pairs HRA with HSA and FSA as consumer-directed health plan (CDHP) accounts.
National insurance concept
Which statement correctly describes a Health Reimbursement Arrangement (HRA)?
It is funded solely by the employer, and unused balances generally carry over from one year to the next. — A Health Reimbursement Arrangement (HRA) is an employer-funded account used to reimburse employees for qualified medical expenses, including deductibles, coinsurance, and copayments. Because the employer contributes all funds, employees do not own the account; unused balances generally roll over from year to year at the employer's option, and the money does not follow the employee to a new job. This distinguishes the HRA from both the FSA, where unused pre-tax funds are typically forfeited, and the HSA, which is individually owned and portable. The HRA is one of the account-based consumer-driven health plan models listed under individual medical insurance in the outline.
National insurance concept
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