Overview: A Health Reimbursement Account or Arrangement (HRA) is an employer funded benefit plan used to reimburse employees for approved medical expenses, typically on a pay-as-you-go basis. The employer contributes on behalf of all eligible employees. No employee contributions are allowed.
HRAs have advantages for both the employer and the employee. Advantages for the employer include:
Some advantages for employees include:
Unlike health savings accounts (HSAs), an HRA is owned and operated by the employer. As a result, it is the employer's responsibility to ensure that the HRA is used only for qualified medical services.
Author: Tracy Morley, SPHR, Legal Editor
Updated to reflect the repeal of the ACA's individual mandate under the federal tax reform law; the removal of vacated EEOC regulations on wellness program incentives; a provision regarding the DOL final rule applicable to certain self-funded association health plans, all effective January 1, 2019; and under review in relation to the final rules regarding contraceptive coverage under the Affordable Care Act.
The US Department of Labor, jointly with the IRS and the Department of Health and Human Services, released proposed rules for Health Reimbursement Arrangements intended to increase HRAs' usability.
Under the 21st Century Cures Act, a small employer that has fewer than 50 full-time employees (including full-time equivalent employees) and that does not offer group health insurance to its active employees may provide stand-alone qualified small employer health reimbursement arrangements (QSEHRAs). An employer may use this model notice to fulfill the annual notice requirement.
The 21st Century Cures Act will allow certain qualified small employer health reimbursement arrangements (QSEHRAs), create W-2 reporting requirements, and include notice requirements.
Employment glossary definition of HRA (Health Reimbursement Arrangement).
HR guidance on the benefits of Health Reimbursement Accounts for employees and employers.