What is a Health Reimbursement Arrangement (HRA)?
A Health Reimbursement Arrangement (HRA) is an employer-sponsored benefit program approved by the Internal Revenue Service (IRS) that reimburses employees for qualified medical care expenses not already paid for by the employer’s health plan. The HRA is a great way to help stretch your healthcare budget because it allows you to pay for healthcare expenses with money that is not taxed.
How the HRA works
Note: The IRS designed the HRA to be very flexible. This flexibility helps ensure employers can design programs that best meet the needs of their employees. However, this flexibility also means that there are not a lot of “standards” that apply across all HRAs. You should check with your employer regarding how your specific HRA works.
Here’s how the HRA works in general:
Your employer contributes money to your HRA to pay for medical expenses up to a certain amount. Eligible items may be limited by your employer or can include all medical expenses allowed by the IRS. See the ADP Eligible Expense Guide for a detailed list.
If you do not spend all of your HRA funds, your employer might establish provisions for rolling over part or all of the remaining funds so you can use them in future years.
Similar to an FSA, you can spend your HRA funds by either using a ADP Spending Account Card at the point of service or requesting reimbursement later. The IRS does require that any use of HRA funds be validated an eligible healthcare expenses, which means you will need to save your receipt for any HRA purchases.