What a Health Reimbursement Account Is

A Health Reimbursement Account (HRA) is a pot of money your employer puts in to cover your medical costs. You do not own it — your employer does. You use it to pay for things like doctor visits, prescriptions, dental work, and vision care, then submit receipts to get reimbursed. The money comes from your employer's budget, not your paycheck, so it is not taxed as income to you.

The key difference from an HSA or FSA: your employer controls the account entirely. They decide how much to put in each year, what counts as a covered expense, and what happens to unused money. You cannot carry over unspent funds to the next year unless your employer's plan specifically allows it — and most do not. This makes an HRA less of a savings tool and more of a reimbursement system your employer runs.

HRAs are almost always paired with a high-deductible health plan (HDHP) or a regular health insurance plan. Your employer uses the HRA to help you cover costs before insurance kicks in, or to cover things insurance does not pay for at all.

Key Takeaways

  • Your employer funds the HRA and owns the account; you use it to pay for medical expenses and request reimbursement with receipts.
  • Money in an HRA is not taxed to you as income, and your employer gets a tax deduction for the contribution.
  • Unused HRA funds do not roll over to the next year in most plans, so money left unspent at year-end is forfeited.
  • You can use HRA funds for a wide range of medical, dental, and vision expenses, but your employer's plan document defines exactly what qualifies.
  • If you leave your job, you typically lose access to the HRA balance, though some employers allow you to submit claims for expenses incurred before you left.

How Money Flows Into and Out of Your HRA

Your employer decides at the start of each plan year how much money to deposit into your HRA. This amount varies widely — some employers put in $500, others $2,000 or more. The employer makes one lump deposit (or sometimes monthly deposits) into an account held in your name, but owned and controlled by the employer.

When you incur a medical expense, you pay for it out of pocket first. Then you submit a claim to the HRA administrator (usually the same company that runs your health insurance) with a receipt or explanation of benefits from your provider. The administrator verifies that the expense qualifies under your plan, and if it does, they reimburse you — either by check, direct deposit, or debit card, depending on how your employer set it up.

Some HRAs come with a debit card that you can use at the point of sale, so you do not have to pay out of pocket and wait for reimbursement. Your employer's benefits team can tell you whether your plan includes this feature.

What Expenses Your HRA Covers

HRAs can cover most medical, dental, and vision expenses that are considered medically necessary. This includes doctor visits, hospital stays, prescription drugs, dental cleanings and fillings, eyeglasses, hearing aids, and physical therapy. The IRS publishes a list of may be able to access expenses, but your employer's plan document may be narrower — some employers exclude dental or vision, or set limits on what they will reimburse.

Expenses that typically do not may have access to include cosmetic procedures, over-the-counter medications (with some exceptions), gym memberships, and vitamins. If you are unsure whether something counts, check your plan document or ask your benefits administrator before you pay for it.

One important detail: you can use HRA funds to cover your insurance premiums in some cases. If your employer's plan allows it, you can use HRA money to pay for COBRA coverage if you leave your job, or for health insurance premiums while you are unemployed. Again, your plan document controls this.

The Use-It-or-Lose-It Rule and Carryover

Most HRA plans operate on a calendar year, and any money you do not use by December 31 is forfeited. This is different from an HSA, where you can carry over unused funds indefinitely. Some employers do allow a small carryover — typically $500 to $1,000 — but this is not standard and depends entirely on what your employer chose.

A few employers offer a grace period instead: you have 60 or 90 days into the next year to submit claims for expenses you incurred in the previous year. This gives you a window to file receipts after the year ends, but the money itself does not roll over.

Because of this rule, it makes sense to estimate your medical costs at the start of the year and think about what you might need. If your employer contributes $1,500 and you know you will have dental work done, plan to use it. If you do not use it, it goes back to your employer.

What Happens to Your HRA When You Leave Your Job

When you leave your employer, you lose access to the HRA. The money in the account stays with your employer — you cannot take it with you or roll it into another account. Some employers allow you to submit claims for medical expenses you incurred before your last day of employment, but only if you submit them within a certain window (often 30 to 90 days after termination). Check with your benefits team about their policy before you leave.

If you are moving to a new job with a new employer, that employer may offer their own HRA, but it will be a separate account with a separate balance. There is no way to transfer funds between employers.

This is one reason an HRA is less portable than an HSA: an HSA belongs to you and moves with you if you change jobs. An HRA is an employer benefit that ends when your employment ends.

HRA vs. HSA vs. FSA: When Each One Makes Sense

An HRA is best if your employer is generous with contributions and you have predictable medical costs. You do not have to worry about choosing how much to contribute — your employer decides. You also do not face the use-it-or-lose-it pressure as acutely if your employer allows carryover or a grace period.

An HSA is better if you want to own the account and carry money forward year to year. You control contributions and can invest the balance. An HSA also moves with you if you change jobs.

An FSA is similar to an HRA in that it is employer-run and has a use-it-or-lose-it rule, but you contribute pre-tax dollars from your paycheck rather than receiving employer contributions. Some employers offer both an HRA and an FSA, though this is less common.

Your employer chooses which account type to offer, so you do not have a choice between them. But understanding how each works helps you use what you have been given.

How to Use Your HRA Effectively

Start by reading your plan document or summary of benefits. Know the contribution amount, the list of covered expenses, whether there is carryover or a grace period, and how to submit claims. Your benefits team or HR department can walk you through this.

Keep receipts and explanations of benefits for every medical expense you pay for. The HRA administrator will ask for proof before they reimburse you. If your plan includes a debit card, use it for may be able to access expenses so you do not have to pay out of pocket and wait.

Plan your medical spending around the calendar year. If you know you need glasses, dental work, or a procedure, try to schedule it before the year ends so you can use the HRA funds. If you are near the end of the year and have unused balance, think about whether you have any medical expenses you have been putting off.

If you leave your job, ask your benefits team what claims you can still submit and how long you have to file them. Do not assume the account closes when ready.

Frequently Asked Questions

Can I use my HRA for my spouse or children?

Only if they are covered under your employer's health insurance plan. If your spouse or children are on your plan, you can use HRA funds to reimburse their medical expenses. If they have separate coverage elsewhere, you cannot use your HRA for them.

What happens if I do not use all my HRA money by the end of the year?

In most plans, unused money goes back to your employer and you lose it. Some employers allow carryover of $500 to $1,000, or a grace period of 60 to 90 days to submit claims for prior-year expenses. Check your plan document or ask your benefits team what applies to you.

Can I withdraw HRA money as cash if I do not have medical expenses?

No. HRA funds can only be used for may be able to access medical, dental, and vision expenses. If you try to withdraw money for non-medical reasons, you will owe taxes on it and may face penalties.

Do I have to have a high-deductible health plan to use an HRA?

Not necessarily. HRAs can be paired with any type of health plan — high-deductible, PPO, HMO, or others. Your employer decides what plan to pair with the HRA. Check your benefits materials to see what plan you are on.

Can I roll my HRA into an HSA if I change jobs?

No. HRA funds cannot be rolled over or transferred to an HSA or any other account. When you leave your job, the HRA balance stays with your employer. Your new employer may offer their own HRA or HSA, but it will be a separate account.