Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A Health Reimbursement Arrangement (HRA) is best characterized as:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
A Health Reimbursement Arrangement (HRA) is funded solely by the employer, never by employee contributions. Unused balances roll over from year to year and can be used to reimburse the employee for qualified medical expenses, including premiums in some arrangements. The HRA is owned by the employer, so an employee generally forfeits any remaining balance when leaving the job. Unlike an HSA, an HRA does not require pairing with a high-deductible health plan and is not portable with the employee.
Why the other options are wrong
- A) A use-it-or-lose-it account funded with salary deferrals describes a health Flexible Spending Account (FSA), not an HRA, which is employer-funded and rolls over.
- B) A portable account owned by the employee describes an HSA; an HRA belongs to the employer and is not portable.
- C) Mandatory pairing with a high-deductible health plan is the rule for an HSA, not an HRA.
Memory hook
HRA = the employer's money that rolls forever. FSA = your money that expires. HSA = your money that travels.