What is a Health Reimbursement Arrangement?

Authorized under Section 105 of the Internal Revenue Code, a Health Reimbursement Arrangement (HRA), also known as a Health Reimbursement Account, is a type of employer funded program that may be offered either in conjunction with a health plan, or as a standalone plan to reimburse qualified out-of-pocket medical expenses.

Although HRAs can be established in conjunction with any type of health plan, most often they are paired with a High Deductible Health Plan (HDHP). This pairing allows an employer to fund employees' individual Health Reimbursement Accounts using premium savings realized by switching from a low deductible health plan to a more economical high deductible plan.

HRA funds are then available to reimburse some portions of employers out of pocket deductible expenses and in some cases other eligible medical expenses.