Health Reimbursement Arrangements (HRA)

A Health Reimbursement Arrangement (HRA) is an employer funded account that reimburses employees for qualified medical expenses, deductibles and co-insurance amounts. An HRA can be used with any medical plan, but must be established and funded with employer dollars. Like an HSA, unused dollars may be used from year-to-year, as long as the employer designs the plan to allow for rollovers (and the employee continues to be a member of the plan).

Most importantly, HRAs require employees to pay health care expenses, causing them to spend heath care dollars wisely. The tax advantages benefit employers and employees alike. Employers may deduct reimbursed employee medical expenses as a business expense; at the same time, these reimbursements don’t count as employee income, saving employees valuable tax dollars as well.