Which statement correctly describes a health reimbursement arrangement (HRA)?

Why A is correct

An HRA is an employer-funded account that reimburses employees for qualified medical expenses, and in some designs for individual insurance premiums. Only the employer may contribute — there are no employee contributions. Because the account is owned by the employer, an employee who separates from the job generally loses the right to use the remaining balance; the arrangement is not portable. While employed, the employer may permit unused funds to carry forward year to year, so the account is not subject to the FSA-style forced forfeiture.

Why the other options are wrong

• B) Portability — an account owned by the individual that follows the person — is the defining trait of an HSA, not an HRA. The HSA belongs to the employee and is fully portable between jobs.
• C) HRAs are funded exclusively by the employer; employee pre-tax contributions are found in FSA, HSA, and cafeteria-plan designs. Employee pre-tax contributions are a feature of FSAs and HSAs instead of HRAs.
• D) The use-it-or-lose-it forfeiture is the FSA rule; an HRA may allow carryover of unused funds by employer design while the employee remains covered. An FSA, not an HRA, uses the forced use-it-or-lose-it rule.

Memory hook

HRA = the employer's money, the employer's account. Leave the job, leave the balance behind. Only the HSA travels.