An employer wants a consumer-directed health arrangement in which only the employer contributes funds that reimburse employees' qualified medical expenses, and unused amounts may revert to the employer when an employee leaves. Which arrangement matches this description?

Why C is correct

A health reimbursement arrangement (HRA) is funded solely by employer contributions; employees cannot contribute. The employer reimburses employees tax-free for qualified medical expenses up to the plan limit, and amounts the employee does not use typically revert to the employer when the employee terminates. Unlike an FSA, an HRA is not subject to the use-or-lose rule, and unlike an HSA it is owned by the employer and not portable with the employee.

Why the other options are wrong

• A) An HSA is owned by the employee, is portable, and allows both employer and employee contributions, so it does not revert to the employer.
• B) An FSA can receive employee salary-reduction contributions and follows the use-or-lose rule; it is not exclusively employer-funded.
• D) An Archer MSA is tied to self-employed individuals or small employers paired with a high-deductible plan and has its own eligibility limits.

Memory hook

HRA = employer's money, employer's account. Leave the job, and the leftover reimbursement reverts to the employer.