What a Health Reimbursement Arrangement Is

A Health Reimbursement Arrangement (HRA) is an account your employer funds to pay for your medical expenses. You don't contribute money to it—your employer does. When you incur a may have access to medical expense, you submit a receipt or claim, and the employer reimburses you from the HRA balance. The money in the account belongs to your employer, not you, which is the key difference from an HSA.

HRAs come in several forms. The most common is the integrated HRA, which works alongside your health insurance plan and covers costs your insurance doesn't—like deductibles, copays, and coinsurance. Some employers offer a standalone HRA to employees who don't have traditional health coverage, though this is less common. A few employers use an excepted benefit HRA, which covers specific expenses like dental, vision, or wellness services only.

The account resets each year, usually on January 1 or your employer's plan year start date. Unused money typically does not roll over to the next year—your employer decides whether funds carry forward or are forfeited. Some employers allow a grace period (usually 2.5 months into the new year) to spend remaining funds, but this varies by plan.

Key Takeaways

  • Your employer funds the HRA entirely; you contribute nothing, and the money belongs to the employer until you use it for a may have access to medical expense.
  • You must submit receipts and proof of the expense to claim reimbursement, and the employer decides which expenses may have access to.
  • Unused HRA funds do not roll over to the next year in most plans, so money left in the account at year-end is typically forfeited.
  • An HRA is not portable—if you leave your job, you lose access to the account and any remaining balance, even if you were promised the money.
  • HRAs are tax-free when used for may have access to medical expenses, meaning reimbursements do not count as taxable income.

How HRA Reimbursement Works

To get reimbursed from an HRA, you pay for a may have access to medical expense out of pocket, then submit a claim to your employer or the plan administrator. The claim typically includes the receipt, an explanation of benefits (EOB) from your insurance if applicable, and a completed claim form. Your employer or administrator reviews the claim to confirm the expense qualifies under the plan rules, then sends you a reimbursement check or direct deposit.

The timeline for reimbursement varies. Some employers process claims within one to two weeks; others take longer. You should check your plan documents or ask your HR department for their specific timeline. Keep all receipts and documentation for at least three to seven years in case of an audit.

Not all medical expenses may have access to. The IRS maintains a list of may be able to access expenses, which includes doctor visits, prescription medications, dental work, vision care, mental health treatment, and medical equipment like crutches or hearing aids. Expenses that do not may have access to include cosmetic procedures, gym memberships, vitamins (unless prescribed by a doctor), and over-the-counter medications purchased without a prescription. Your employer's plan may be more restrictive than the IRS list, so review your plan documents to know what your specific employer covers.

HRA vs. HSA: The Main Differences

An HRA and an HSA both reimburse medical expenses tax-free, but they work very differently. With an HSA, you own the account and contribute your own money (your employer may also contribute). With an HRA, your employer owns the account and funds it entirely. You have no say in how much money goes in.

An HSA is portable—if you leave your job, you take the account and its balance with you. An HRA is not. When you leave your employer, you lose access to the HRA and forfeit any remaining balance, regardless of whether your employer promised you the money. This is a major disadvantage if you change jobs frequently or plan to leave soon.

HSA funds roll over indefinitely and grow like a savings account. HRA funds typically expire at year-end and do not carry forward. Some employers allow a grace period to spend remaining funds, but most do not. If your employer offers both an HSA and an HRA, you generally cannot contribute to both in the same year, though the rules are complex and depend on your specific coverage.

What Happens to Your HRA When You Leave Your Job

When you leave your employer, your access to the HRA ends immediately. Any money remaining in the account stays with your employer—you cannot take it with you or use it after you leave. This applies even if you were promised a certain amount or if you believe the money was earned through your work. The account belongs to the employer, not to you.

Some employers offer a COBRA continuation option that allows you to continue health coverage for a limited time after leaving, but this does not extend to the HRA. You cannot continue using the HRA under COBRA. If you had a pending reimbursement claim when you left, check with your former employer's HR department about whether they will process it, but they are not required to do so.

If you are changing jobs and your new employer offers an HSA, you can open one immediately and begin saving for future medical expenses. Unlike the HRA, an HSA is yours to keep and use for the rest of your life, even if you change jobs multiple times.

How Your Employer Decides What Qualifies

Your employer's HR department or benefits administrator decides which expenses the HRA covers. They must follow IRS rules for may have access to medical expenses, but they can be more restrictive. For example, the IRS allows acupuncture as a may have access to expense, but your employer's plan might not cover it.

Your plan documents should list covered expenses or direct you to the IRS's official list. If you are unsure whether an expense qualifies, ask your HR department or plan administrator before you pay for it. Getting approval in advance prevents a rejected reimbursement claim later. Some employers provide a list of covered services; others require you to check case by case.

Expenses that are reimbursed by insurance do not may have access to for HRA reimbursement. If your health insurance covers a service and you receive a reimbursement from them, you cannot also claim that same expense through the HRA. This rule prevents double-dipping.

Tax Treatment of HRA Reimbursements

Reimbursements from an HRA are not taxable income. When your employer reimburses you for a may have access to medical expense, that money does not appear on your W-2 and does not increase your taxable income. This is one of the main benefits of an HRA—you get tax-assistance programs to cover medical costs.

If you submit a claim for an expense that does not may have access to, and your employer reimburses you anyway, that reimbursement may be treated as taxable income. To avoid this, only claim expenses that your plan covers. If you are unsure, ask before submitting the claim.

Your employer cannot deduct HRA contributions as a business expense if they reimburse you for an expense you already deducted on your personal tax return. This is rare, but it matters if you are self-employed or have unusual tax circumstances. In most cases, you will not encounter this issue.

Common Reasons HRA Claims Are Denied

The most common reason for a denied claim is missing documentation. If you do not include a receipt, an EOB from your insurance, or a completed claim form, the administrator will reject it and ask you to resubmit. Keep all paperwork organized and submit it promptly.

A claim may also be denied if the expense does not may have access to under your plan. Cosmetic procedures, gym memberships, and over-the-counter medications without a prescription are frequent culprits. If your claim is denied, the denial letter should explain why. If you disagree, ask your HR department whether you can appeal or provide additional documentation.

Timing can also cause a denial. If you submit a claim after the plan year ends or after a deadline set by your employer, it may be rejected. Check your plan documents for claim submission deadlines—many employers require claims to be filed within 90 days of the expense.

Frequently Asked Questions

Can I use my HRA to pay for my spouse's or child's medical expenses?

Yes, if they are covered under your health plan or are your tax dependents. You can submit claims for their may have access to medical expenses and receive reimbursement. The money in the HRA is for your household's medical costs, not just your own.

What happens to my HRA if I take unpaid leave or go on disability?

This depends on your employer's plan. Some employers continue to fund the HRA during unpaid leave or disability; others do not. Check your plan documents or ask your HR department about how unpaid absences affect your HRA. If your employer stops funding it, you may still be able to use any remaining balance for may have access to expenses.

Can I use my HRA to pay for health insurance premiums?

Generally, no. HRA funds cannot be used to pay for your health insurance premiums, life insurance, or disability insurance. They can be used for out-of-pocket costs like deductibles and copays, but not for the insurance itself. Some exceptions exist for COBRA premiums or long-term care insurance, but these are rare and depend on your plan.

Do I need to submit receipts for every HRA claim?

Yes. Your employer or plan administrator requires proof that you incurred the expense. This means a receipt from the provider, an invoice, or a statement showing the date, amount, and description of the service. Without documentation, your claim will be denied.

Can my employer take back money they put in my HRA?

No, once your employer funds the HRA, they cannot reclaim that money. However, they can decide not to fund it in future years or to reduce the amount they contribute. They also own any unused balance at year-end and can keep it rather than rolling it forward to the next year.