Health Insurance

What is an HRA?

Kendra Bean
Kendra Bean26 Aug 2022
Reviewed and Fact Checked ✔️

A Health Reimbursement Arrangements (HRA) is an agreement between employee and employer about a predetermined allowance that may be eligible for qualified medical expenses. Only employers can put money into an HRA. Therefore, you, as an employee, cannot contribute. You sign up for an HRA through your employer during the open enrollment period.

What is an HRA?

An HRA, as mentioned above, is a Health Reimbursement Arrangement, often referred to also as a Health Reimbursement Account. The Department of Health and Human Services (HHS) defines an HRA as “an employer-funded group health plan from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.” Unused amounts roll over for use in subsequent years. The employer financially contributes to the arrangement. HRA allowances can usually be used for medical services such as:

  • Prescriptions
  • Copays
  • Insurance Premiums
  • Deductibles
  • Vision
  • Dental

*Your employer will determine which health care expenses are eligible under your HRA; therefore, it is essential to always check with your plan about coverage.

An HRA is not like a Health Savings Account (HSA) or Flexible Spending Account (FSA),  nor is it even an account. Instead, it is an arrangement between an employer and employees with a predetermined allowance for medical expenses. HRAs are employer-owned and tax-advantaged, meaning that the account is exempt from taxation. 

HRA coverage occurs retroactively, so you are reimbursed for a qualified medical expense by your employer. Your employer decides how much it will put into the plan, and you as an employee can request reimbursement for actual medical expenses incurred up to that predetermined amount. HRAs can go hand in hand with any health plan but are often paired with a High Deductible Health Plan (HDHP).

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Kendra Bean

Kendra Bean is from Maui, Hawaiʻi. She is currently enrolled at the University of Hawaiʻi at Mānoa, specializing in Epidemiology. She is passionate about improving health literacy and access to care, specifically in rural areas.

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