What Is a Health Reimbursement Arrangement?

A Health Reimbursement Arrangement (HRA) is an employer-funded account that reimburses employees for out-of-pocket medical expenses and, in some cases, health insurance premiums — all tax-free to the employee. Unlike an HSA or FSA, only the employer contributes to an HRA; employees don't make contributions of their own. There are several types: a traditional HRA works alongside employer-sponsored health insurance to reimburse deductibles and copays; a Qualified Small Employer HRA (QSEHRA) allows small businesses to reimburse employees for individual health insurance premiums and medical costs; and an Individual Coverage HRA (ICHRA) allows employers of any size to reimburse employees for individual market health insurance. The key difference between an HRA and an HSA is that HRA funds generally can't be taken with you when you leave the employer — unused funds typically revert to the employer, though some plans allow rollover within the same employer. HRAs don't require employees to be enrolled in a high-deductible health plan, which gives employers more flexibility in plan design.