HRA — Health Reimbursement Arrangement
An employer-funded account that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums on a tax-free basis.
Official source: irs.gov
An HRA, or Health Reimbursement Arrangement, is a special kind of bank account for healthcare that your boss sets up and puts money into for you. You don't put any of your own money in it. The main idea is to help you pay for medical costs without having to pay taxes on that money.
Here's how it works: When you have a medical bill or pay for your own health insurance, you can ask your boss to pay you back from your HRA. As long as it's for approved medical stuff, that money you get back is completely tax-free for you. This is a big help because it means more money stays in your pocket. There are different kinds of HRAs. For example, some, like the QSEHRA and ICHRA, can even pay you back for your monthly health insurance bills.
One important thing to remember is that if you leave your job, you usually lose the money left in your HRA. It doesn't typically follow you to a new job like a 401(k) might.
In real life
- A company uses an HRA to help its workers pay for their doctor visits and medicine.
- Someone with an HRA can get money back for their health insurance bill each month.
- A person uses their HRA funds to cover the cost of a new pair of glasses.
Also known as
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Frequently asked questions about HRA
What is Health Reimbursement Arrangement (HRA)?+
An employer-funded account that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums on a tax-free basis. HRAs are funded entirely by the employer — employees never contribute.
Who qualifies for HRA?+
Eligibility rules vary. Use BK's free Benefit Eligibility Screener to see if you may qualify based on your situation.
How do I apply for HRA?+
BenefitKarma's free Benefit Eligibility Screener can point you to the right application path.
Where can I get help?+
Use BenefitKarma's free Benefit Eligibility Screener to see what programs you may qualify for. The Find Benefits tool tool also lets you browse programs by state.
Source: irs.gov