What Are Health Reimbursement Accounts (HRAs)?

Also known as Health Reimbursement Arrangements, HRAs are insurance arrangements set up by employers for group medical coverage. HRAs typically have higher deductible health insurance plans and may reimburse some out-of-pocket medical expenses for employees. In the administration of HRA plans, the employer determines the rules, such as whether reimbursements are made through:

• Set contributions to an employer-owned account established for each employee
• Reimbursement of medical expenses as they are incurred.

Unlike Health Savings Accounts (HSAs), in HRAs the employer rather than the employee establishes the reimbursement accounts. So if an employee leaves the company, the remaining funds are owned by the business.

Offering an HSA or HRA option enables a business to keep health insurance costs low while still ensuring that their employees will have the coverage they need. The high-deductible insurance makes employees fiscally responsible for their day-to-day healthcare costs while putting a cap on their expenses to ensure that they will be able to afford the services they need.

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