A Health Reimbursement Arrangement is an employer-funded account that reimburses employees tax-free for eligible medical expenses, and sometimes premiums. The employer sets the allowance and the rules, and unused amounts may carry over depending on plan design. Only the employer contributes.
It depends on the HRA type. A traditional/integrated HRA covers employees enrolled in the group plan; ICHRAs can be offered to all employees or defined classes; and QSEHRAs must generally be offered to all full-time employees on the same terms.
A traditional HRA reimburses eligible out-of-pocket medical costs; deductibles, copays, and coinsurance, and, depending on the employer’s design, other IRS-qualified medical expenses for employees enrolled in the group plan.
Short answer: Sometimes. Health FSAs are only COBRA-eligible if the account is underspent at the time of the qualifying event, while dependent care FSAs are not subject to COBRA.
It depends on the business structure. C-corporation owners can participate tax-free (they are employees), but sole proprietors, partners, and more-than-2% S-corporation shareholders generally cannot, though they can still offer HRAs to their W-2 employees.
A MERP (Medical Expense Reimbursement Plan) is a type of HRA; the term usually describes a specific strategy (using an HRA to self-fund part of a high-deductible group plan), not a different account. All MERPs are HRAs, but not all HRAs are MERPs.
Usually you lose access to your HRA when you leave a job, and unused funds revert to the employer, because the HRA is employer-owned. Exceptions include COBRA continuation (where available) and retiree HRAs.
Yes. In almost all cases employees must submit a receipt or Explanation of Benefits so the employer or TPA can confirm the expense is qualified under IRC §213(d) before reimbursing, even when a debit card is used.
Yes, but only if the HRA is HSA-compatible: a limited-purpose HRA (dental/vision), a post-deductible HRA, a suspended HRA, or a retiree HRA. A general-purpose HRA disqualifies HSA contributions.
Yes, but only certain HRAs. ICHRAs and QSEHRAs are designed to reimburse individual-market and Medicare premiums; most traditional/integrated HRAs reimburse out-of-pocket medical costs but not premiums.
Maybe, it depends on the employer’s plan design. There is no IRS requirement to forfeit unused HRA funds at year-end, but employers are not required to allow rollover either, so options range from full rollover to none.
Short answer: Yes. Most HRAs are considered COBRA-eligible group health plans, meaning employees who experience a qualifying event must be offered the option to continue the HRA through COBRA, with limited exceptions.
The employer owns the money in an HRA, not the employee. Unlike an HSA, HRA funds are not portable; unused amounts generally revert to the employer at year-end or termination unless the plan allows rollover or post-termination access.
HRA funds reimburse IRS-qualified medical expenses under IRC §213(d): doctor visits, prescriptions, deductibles and coinsurance, dental and vision, and more, but the employer can narrow the eligible list in its plan design.
Short answer: HRAs are employer-owned and funded, while HSAs and FSAs involve employee elections. Each account has different rules for ownership, contributions, portability, and how funds are accessed.
An HRA is an employer-funded, employer-owned account that reimburses employees for qualified medical expenses. Only the employer contributes; the employer sets the funding amount, the eligible expenses (within IRS rules), and whether unused funds roll over.