Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly describes a health reimbursement arrangement (HRA)?
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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. 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.
Why the other options are wrong
- B) Ownership and portability describe the HSA, not the HRA; HRA funds belong to the employer and are left behind when employment ends.
- C) The HSA must be paired with a qualifying high-deductible health plan; an HRA has no such pairing requirement and is funded by the employer, not employee payroll deductions.
- D) Unused HRA funds revert to the employer, not to the IRS; the employer retains the money, not the government.
Memory hook
HRA = employer's money, employer's rules. Leave the job, leave the balance behind.