Short answer: 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.
A Health Reimbursement Arrangement (HRA) is an employer-funded benefit that reimburses employees for certain healthcare expenses. Unlike an HSA or FSA, only the employer can contribute to an HRA; employees do not add any money themselves.
Employers decide:
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How much money to make available to each employee
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What expenses are eligible for reimbursement (within IRS guidelines)
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Whether unused funds roll over from year to year
Employees typically pay out of pocket for an eligible expense, then submit a claim for reimbursement. Some HRAs may also provide a debit card to simplify the process, but receipts or documentation are still usually required.
HRAs are highly flexible and can be designed in different ways. For example:
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Some are tied to a traditional group health plan
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Others, like ICHRAs or QSEHRAs, can reimburse premiums for individual coverage
One important thing to remember: The employer owns the HRA, so unused funds usually stay with the employer if the employee leaves the company, unless it’s a retiree HRA or another arrangement that allows continued access.