An HRA Health Reimbursement Account is a tax-free group benefit that is financed and controlled by the employer for workers to utilize for eligible medical costs. Employers may give year-end rollover choices in addition to a fixed cash amount available for usage on eligible costs each year. When you start working for a firm, you’ll be told about any HRA plans available and offered the choice to join.
Although an HRA is not health insurance, it is a useful tool for workers to pay for a variety of medical expenditures, including some that aren’t covered by a standard health insurance plan. What medical expenditures are covered by the HRA plan is determined by the employer.
The difference between an HRA and an HSA insurance plan is that an HRA insurance plan is owned and funded by the company, but an HSA insurance plan is owned and funded by the employee. This implies that if an employee with an HRA plan quits their job, any outstanding HRA balance belongs to the company. Employees, on the other hand, take their HSA insurance plan with them when they change jobs.
HRA permits businesses to keep control over the design of HRA plans and fund rollover options, and it may be utilized as a retention strategy for employees.