What is an HRA (Health Reimbursement Arrangement)?

A health reimbursement arrangement (HRA) is an employer-funded spending account that can be used to pay qualified medical expenses.

The HRA is 100% funded by your employer. The terms of these arrangements can provide first dollar medical coverage until the funds are exhausted or insurance coverage kicks in. The contribution amount per employee is set by the employer, and the employer determines what the funds can be used to cover and if the dollars can be rolled over to the next year. In most cases, if the employee leaves the employer, they can’t take remaining HRA funds with them.

Typically, your employer provides a high-deductible health plan and establishes an HRA in your name to help pay for your eligible out-of-pocket medical expenses. You may not contribute to the funding of your HRA. If you use all of your funds and incur additional medical expenses that are your responsibility, you’ll be required to pay for these additional expenses out of your own pocket.

An HRA is another type of health account that provides an incentive for consumers to become actively involved in your health care spending.