Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A Health Reimbursement Arrangement (HRA) is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An HRA is an employer-funded account used to reimburse covered medical expenses. The employer owns the account, contributions are not taxable income to the employee, and unspent funds generally carry over from year to year. HRAs are one of the consumer-driven health plan (CDHP) arrangements, along with MSAs, HDHPs paired with HSAs, and FSAs, that the California A&H objectives cover as alternatives to traditional copay-based plans.
Why the other options are wrong
- B) An employee-funded account with use-it-or-lose-it rules describes a flexible spending arrangement (FSA), not an HRA; HRAs are funded by the employer and may carry unused balances forward.
- C) HRAs are private employer arrangements, not government accounts, and they are not used to pay Medicare premiums.
- D) While an HRA can be paired with a high-deductible plan, it is not conditioned on HDHP enrollment the way an HSA eligibility is.
Memory hook
HRA = the employer's money reimbursing your medical bills, and leftover funds roll over. Employer-funded, not use-it-or-lose-it.