What is a health reimbursement arrangement (HRA)?

A health reimbursement arrangement (HRA) is an employer-funded plan that provides reimbursement to employees for out-of-pocket medical expenses. This structure allows employers to contribute a certain amount of money toward their employees' qualifying medical costs, which may include things like deductibles, copayments, and other healthcare expenses that are not covered by traditional health insurance plans.

The defining feature of an HRA is that it is funded solely by the employer, and employees can withdraw these funds to pay for eligible medical expenses. The employer has control over the contribution limits and the plans can be customized to meet the needs of both the organization and its employees.

In contrast to the other options, an HRA specifically focuses on reimbursing medical expenses rather than wages, premiums, or mandated coverage, making it a valuable benefit in managing healthcare costs for employees.