A Health Reimbursement Account (HRA) is an employer-funded health benefit plan that reimburses employees for out-of-pocket medical expenses. The health plan must be integrated with a qualified employer-sponsored group health insurance plan to avoid excise tax penalties.
Using a Health Reimbursement Arrangement yields "tax advantages to offset health care costs" for both employees and employers.
Employees are reimbursed tax-free for qualified medical expenses up to a maximum amount for a specific coverage period.
HRAs reimburse only items (co-pays, coinsurance, deductibles, and services) agreed to by the employer that are not covered by the employer's selected standard insurance plan.