What an HRA is and how the money flows

A Health Reimbursement Arrangement (HRA) is an account your employer funds to pay for your medical expenses. Unlike an HSA or FSA, you do not contribute your own money — your employer decides how much to put in each year, and you use it to cover may have access to medical costs like copays, deductibles, prescriptions, and dental work. When you incur a medical expense, you submit a receipt or claim to your employer's plan administrator, and they reimburse you from the HRA balance.

The money in an HRA belongs to your employer, not to you. This is the core difference from an HSA, where the account is yours to keep even if you leave the job. Your employer controls the rules: how much funding goes in, what counts as a may have access to expense, whether unused money rolls over to the next year, and what happens to the balance if you leave the company.

HRAs are tax-free to you — you do not pay income tax on the reimbursements, and your employer does not pay payroll tax on the contributions. This makes them a valuable benefit, but only if you actually use the money before it expires or you leave your job.

Key Takeaways

  • Your employer funds the HRA account entirely; you contribute nothing from your paycheck, and the money is not yours to keep if you leave the job.
  • You can use HRA funds to pay for copays, deductibles, prescriptions, dental, vision, and other may have access to medical expenses after you submit receipts.
  • Unused HRA money may roll over to the next year, expire at year-end, or be forfeited when you leave your job — the rules depend on your employer's plan design.
  • HRA reimbursements are tax-free to you, but the account is not portable like an HSA, so you lose access to remaining funds if you change jobs.
  • Some employers pair an HRA with a high-deductible health plan (HDHP) to help you cover the deductible; others offer it alongside any health plan.

Types of HRAs and how they pair with health plans

The most common type is an Integrated HRA, which your employer designs to work alongside your health insurance. Your employer funds it specifically to help you cover your deductible or out-of-pocket costs under your health plan. For example, if your deductible is $1,500 and your employer funds your HRA with $1,500, you can use that money to satisfy the deductible when you receive medical care.

A Standalone HRA is less common but exists. Your employer funds it to cover medical expenses whether or not you have health insurance through them. This type is rarer because most employers use HRAs to complement their group health plans, not replace them.

Some employers offer a may have access to Small Employer HRA (QSEHRA), which is designed for small businesses with fewer than 50 employees. The employer funds it, and you can use it to pay premiums for individual health insurance you buy on your own, as well as may have access to medical expenses. This type has annual funding limits set by the IRS, which change each year.

The type of HRA your employer offers determines what you can spend the money on and whether it works with your deductible. Ask your benefits administrator which type you have and what the plan rules are for your company.

What expenses the HRA covers and how to get reimbursed

HRA funds cover may have access to medical expenses as defined by the IRS. This includes copays and coinsurance, deductibles, prescription medications, dental work, vision care, hearing aids, and medical equipment like crutches or wheelchairs. Mental health care, physical therapy, and lab work also count. The IRS maintains a full list, but the basic rule is: if it is a medical or dental service or product prescribed or recommended by a doctor, it likely qualifies.

Over-the-counter medications are trickier. Insulin is always covered. Most other over-the-counter drugs (like ibuprofen or allergy medicine) require a prescription from your doctor to be reimbursed through an HRA, even though you can buy them without one at the pharmacy.

To get reimbursed, you submit a claim to your plan administrator — usually through an online portal, by mail, or by phone. You will need to provide the receipt showing what you paid, the date of service, and proof that it is a may have access to expense. Some employers issue a debit card linked to the HRA, which lets you pay directly at the pharmacy or doctor's office without submitting a claim afterward. Others require you to pay out of pocket and then request reimbursement.

Reimbursement timelines vary. Most employers process claims within 5 to 10 business days, but check your plan documents or ask your benefits team for the exact timeline at your company.

Forfeiture rules and what happens to unused money

This is where HRAs differ most from HSAs. An HSA is yours to keep forever, even after you leave your job. An HRA is not. Your employer's plan document spells out what happens to money you do not use.

Some employers allow carryover, meaning unused HRA funds roll into the next calendar year. The amount that can roll over may be capped — for example, your employer might allow up to $500 to carry over, and anything above that is forfeited. Other employers use a use-it-or-lose-it rule, where any balance remaining on December 31 is forfeited and you start fresh on January 1.

If you leave your job, most HRA plans do not let you take the remaining balance with you. Some employers allow a short window (often 30 to 90 days) to submit claims for expenses you incurred while employed, but after that, the money is gone. A few employers offer COBRA continuation for HRAs, which lets you keep using the account for a limited time after you leave, but this is uncommon and usually costs you money.

Before you enroll in an HRA or count on it to cover future expenses, ask your benefits administrator: Does unused money roll over? If so, how much? What happens if I leave the company? Can I submit claims after I leave? The answers determine whether the HRA is truly valuable to you or a benefit you risk losing.

HRA vs. HSA vs. FSA: which is which

All three are tax-advantaged accounts for medical expenses, but they work very differently. An HSA is your personal account — you own it, you fund it (usually through payroll deductions), and you keep it even if you change jobs. An FSA is employer-funded or employee-funded, but you lose unused money at year-end (with a small carryover or grace period option in some plans). An HRA is always employer-funded, you do not contribute, and you lose it if you leave your job.

The tax treatment is the same: contributions and reimbursements are tax-free. But portability and ownership are not. If you value keeping your medical savings long-term, an HSA is the strongest choice. If you want to use employer money with no personal contribution, an HRA is attractive — but only if you plan to stay at your job and use the money before year-end.

Some employers offer more than one. For example, you might have an HSA through your high-deductible health plan and also an HRA to help cover your deductible. In that case, you can use both: spend the HRA money first on may have access to expenses, and save your HSA for later or use it for expenses the HRA does not cover.

How to track your HRA balance and avoid losing money

Your employer's benefits administrator or plan provider maintains your HRA balance. Most offer an online portal where you can log in and see how much money is available, what you have spent, and what claims are pending. Some send statements by mail or email. Ask your HR department how to access your balance and how often it updates.

Set a reminder in late November or early December to check your balance. If your plan uses a use-it-or-lose-it rule and you have unused money, you have a few weeks to schedule medical appointments, fill prescriptions, or submit claims for expenses you already paid out of pocket. If your plan allows carryover, confirm the cap so you know how much you can safely leave unspent.

Keep all receipts for medical expenses you pay out of pocket, even if you do not submit a claim right away. You can usually submit claims for past expenses within a certain window (often 30 to 90 days after the end of the plan year). This gives you a grace period to gather documentation and request reimbursement before the money is truly gone.

If you are planning to leave your job, ask HR whether you can submit claims for expenses incurred during your employment after your last day. Some plans allow this; others do not. If they do, submit claims quickly — do not wait until after you have left, because your access to the system may be cut off.

Special rules for HRAs and life changes

If you have a may have access to life event — marriage, divorce, birth of a child, loss of other health coverage — you may be able to change your HRA election outside the annual open enrollment period. However, HRA rules are stricter than HSA or FSA rules. Most employers do not let you increase or decrease your HRA mid-year, because the employer funds it, not you. Check with your benefits team about what changes are allowed in your plan.

If you go on leave (medical, parental, or unpaid), your HRA usually continues. You can still submit claims for medical expenses you incur while on leave. However, if your employer stops contributing to your HRA during unpaid leave, you will not receive new funding, though you can spend what is already in the account.

If you are laid off or your job is eliminated, you may have the right to continue your HRA through COBRA, though this is rare and you will have to pay the full cost yourself. More commonly, your HRA access ends on your last day of employment. This is another reason to submit any pending claims before you leave.

Frequently Asked Questions

Can I use my HRA to pay health insurance premiums?

It depends on the type of HRA. A may have access to Small Employer HRA (QSEHRA) can pay premiums for individual health insurance you buy on your own. A standard Integrated HRA usually cannot pay premiums for your employer's group health plan, but it can pay your share of the premium if your employer allows it. Check your plan documents or ask HR.

What happens to my HRA if I get fired or laid off?

You lose access to the remaining balance on your last day of employment. Some employers allow a short window (30 to 90 days) to submit claims for expenses you incurred while employed, but after that, the money is forfeited. COBRA continuation for HRAs is rare. Ask HR about the claims submission deadline before you leave.

Can I roll my HRA into an HSA when I change jobs?

No. HRA funds cannot be rolled over or transferred to an HSA or any other account. The money stays with your employer and is forfeited when you leave. This is a key difference from an HSA, which is portable. If you are changing jobs, use or claim any remaining HRA balance before your last day.

Do I have to use my HRA, or can I just leave the money in the account?

You do not have to use it, but you risk losing it. If your plan has a use-it-or-lose-it rule, any unused balance at year-end is forfeited. If your plan allows carryover, you can leave money in the account, but it may be capped. Check your plan rules and consider scheduling medical appointments or filling prescriptions before year-end if you have a large balance.

Can my employer change or eliminate my HRA?

Yes. Your employer can modify the HRA plan, change the funding amount, or eliminate it entirely. They must give you notice, usually at least 30 days before the change takes effect. If your employer eliminates the HRA, any remaining balance may be forfeited, or your employer may allow claims for a limited time. Ask HR if changes are coming to your plan.