HEALTH REIMBURSEMENT ARRANGEMENT (HRA)
Back to GlossaryDefinition
An employer-funded arrangement that reimburses eligible medical expenses.
Summary
A Health Reimbursement Arrangement (HRA) is a tax-advantaged benefit plan where employers set aside money specifically to help employees pay for qualified medical expenses. Unlike employee-funded accounts, HRAs are funded entirely by the employer, and employees can only be reimbursed for expenses that meet IRS guidelines. The employer determines the annual contribution amount, eligible expenses, and plan rules. Unused funds may roll over to the next year depending on the employer's policy, but employees typically lose access to the funds if they leave the company.
Usage Context
Understanding HRAs is crucial when studying employee benefits packages, comparing different types of health savings accounts, analyzing healthcare cost management strategies, and examining tax-advantaged benefit programs in human resources or healthcare administration courses.
Common Confusions
- Confusing HRAs with HSAs - HRAs are employer-funded while HSAs can be funded by employees
- Thinking they can contribute their own money to an HRA
- Assuming HRA funds are always portable when changing jobs
- Believing all medical expenses qualify for HRA reimbursement
- Confusing HRA contribution limits with HSA limits
