A Health Reimbursement Arrangement (HRA) is an employer-sponsored benefit plan that allows employers to reimburse employees for qualified medical expenses on a tax-advantaged basis. HRAs are established and funded by employers and are designed to help employees cover out-of-pocket healthcare expenses not covered by their health insurance plans.

Key features of Health Reimbursement Arrangements (HRAs) include:

1. **Employer Funding:** Employers contribute funds to the HRA, and these contributions are typically tax-deductible for the employer. The funds contributed to the HRA belong to the employer until they are used by employees to reimburse eligible medical expenses.

2. **Employee Reimbursement:** Employees can use the funds in their HRA to reimburse themselves for eligible medical expenses. Qualified expenses may include deductibles, co-payments, coinsurance, and other out-of-pocket costs for medical care.

3. **Tax Advantages:** HRA contributions are generally tax-free for employees. Employees do not pay income tax on the employer contributions to the HRA, making it a tax-advantaged way to help cover healthcare costs.

4. **Employer Control:** Employers have control over the design and structure of the HRA. They can determine the contribution amounts, eligible expenses, and other plan details. This flexibility allows employers to tailor HRAs to meet the specific needs of their workforce.

5. **Integration with Health Plans:** HRAs are often designed to work in conjunction with a high-deductible health plan (HDHP) or other health insurance plans. The HRA can help employees manage the financial impact of higher deductibles by providing funds to cover qualified expenses.

6. **No Portability:** Unlike Health Savings Accounts (HSAs), HRAs are typically not portable. When employees leave their employer, they generally cannot take the HRA funds with them. However, some HRAs may have options for rollover or conversion.

7. **Eligible Expenses:** HRAs can cover a wide range of eligible medical expenses, including those not covered by insurance. However, the specific eligible expenses may be defined by the employer in the HRA plan documents.

8. **Retiree HRAs:** Some employers offer HRAs to retirees as a way to assist with healthcare costs during retirement. Retiree HRAs may have different rules and provisions compared to HRAs for active employees.

There are different types of HRAs, each with its own set of rules and features. Some common types include the Integrated HRA, the Qualified Small Employer HRA (QSEHRA), and the Individual Coverage HRA (ICHRA).

It’s important for both employers and employees to understand the terms and conditions of the HRA, including eligible expenses, contribution limits, and any restrictions. Employers should communicate the details of the HRA to employees and provide clear guidance on how to use the benefits offered through the arrangement.