Accounts
Health Reimbursement Arrangement (HRA)
An employer-funded arrangement that reimburses qualified medical expenses
Key takeaways
- Funded solely by the employer — employees never contribute by salary reduction.
- The employer defines what is eligible and whether unused amounts roll over.
- Several varieties exist, including excepted-benefit, individual-coverage (ICHRA), and small-employer (QSEHRA) designs.
What it is
An employer-funded arrangement that reimburses qualified medical expenses. The account is a structure; the investments it holds are separate and carry their own risks.
How it works
- The employer establishes the arrangement and credits a notional amount.
- The employee incurs a qualified expense and submits it.
- The employer reimburses, tax-free, up to the available balance.
Eligibility
Established by an employer. Eligibility, design, and carryover are set by the plan document.
Contributions and funding
Employer funded. For 2026, an excepted-benefit HRA is capped at $2,200; a QSEHRA is capped at $6,450 self-only and $13,100 for families.
What it can hold
A notional balance — an employer promise to reimburse, rather than a funded account the employee owns.
Taxes and reporting
Employer contributions are excluded from the employee’s income and reimbursements are tax-free.
Withdrawals and distributions
Paid as reimbursement of substantiated qualified expenses.
Risks and limitations
- The balance is generally forfeited at termination unless the plan says otherwise
- It is an employer promise, not a portable owned account
- Design rules vary sharply by HRA type and interact with HSA eligibility
Frequently asked questions
Can I contribute to it?
No. HRAs are funded exclusively by the employer.
Does it kill my HSA eligibility?
A general-purpose HRA usually does. Excepted-benefit and limited-purpose designs generally do not.
Do unused funds roll over?
Only if the plan document permits it.
Educational only. This page is general information, not individualized investment, legal, or tax advice. Rules depend on your account type, transaction, tax year, and circumstances — consult a qualified professional.