Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A Health Reimbursement Arrangement (HRA) differs from an HSA and an FSA because:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A Health Reimbursement Arrangement (HRA) is an employer-funded account used to reimburse employees for qualified medical expenses. The defining rule is that the employer provides all the money: employees cannot make contributions to an HRA. Unused funds generally stay in the account and can be carried over for future use, though the account is not portable to a new employer the way an HSA is. This contrasts with an HSA, where employees may contribute, and an FSA, where employees fund the account through payroll deductions.
Why the other options are wrong
- B) HRAs are funded only by the employer, not by employee payroll deductions; employee-funded accounts are FSAs or HSAs.
- C) HRA funds are used to reimburse qualified medical expenses and cannot simply be cashed out by the employee as personal income.
- D) An HRA generally belongs to the employer and does not follow the employee to a new job, unlike an HSA which the individual owns.
Memory hook
HRA = HR (employer) pays. Employees never put a dime in. Employer money stays with the employer.