What is a Health Reimbursement Arrangement?
A Health Reimbursement Arrangement (HRA) is an employer-funded spending account that can be used to pay qualified medical expenses. It takes two components to create an HRA-based health coverage plan:
- A qualified high deductible health plan (HDHP)
- Health Reimbursement Arrangement (HRA)
The HDHP is the insurance component. It provides medical coverage for you and your family in case of emergency, major illness, or high annual health care costs. The deductible is higher than in a traditional insurance plan, but qualified HDHPs have a significantly lower premium cost. In most cases, the HDHP also covers preventive care at 100%.
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 cannot take remaining HRA funds with them.
Frequently Asked Questions Qualified Medical Expenses