What a Health Reimbursement Account Is

A Health Reimbursement Account (HRA) is a pot of money your employer sets aside to pay for your medical expenses. You do not contribute to it—your employer funds it entirely and decides how much to put in each year. When you incur a medical cost that the plan covers, you submit a receipt or claim, and the HRA pays it back to you.

The money in an HRA belongs to your employer, not to you. That is the crucial difference from an HSA, where the account is yours to keep. If you leave your job, the balance typically stays with your employer—you cannot take it with you. Some employers allow you to carry over unused funds into the next year; others do not.

HRAs are most common in mid-sized and large companies. Your employer designs the plan, so the rules vary significantly from one workplace to another. Two HRAs at two different companies may cover completely different things or have different deductibles.

Key Takeaways

  • Your employer funds an HRA entirely; you contribute nothing, and the money is theirs to reclaim if you leave the job.
  • You can use HRA funds to pay for medical expenses your health plan covers, including deductibles, copays, and some out-of-pocket costs.
  • HRA rules are set by your employer, so what one HRA covers may differ from another—check your plan documents to know what is included.
  • Unlike an HSA, HRA funds do not roll over to a new employer and cannot be invested for growth.

How Money Moves In and Out of an HRA

Your employer deposits a set amount into your HRA account at the start of each plan year—usually January 1st, though some employers use different dates. That amount is fixed; your employer does not add more money during the year unless the plan document says otherwise.

When you have a medical expense, you pay it out of pocket first. Then you submit a claim to the HRA administrator (often the same company that runs your health insurance) with a receipt or explanation of benefits from your provider. The administrator verifies that the expense is covered under your HRA plan and reimburses you—usually within one to three weeks.

Some employers offer a debit card tied to the HRA, which lets you pay directly at the point of service without submitting a claim afterward. This is less common than it is with FSAs, but it does exist. Check with your benefits administrator to see whether your plan offers this option.

What an HRA Covers

An HRA can reimburse you for medical expenses your health insurance plan does not fully cover. This typically includes deductibles (the amount you pay before insurance kicks in), copays (fixed fees for office visits or prescriptions), and coinsurance (your percentage of the cost after the deductible is met).

Some HRAs also cover expenses that health insurance does not cover at all: dental work, vision care, hearing aids, or over-the-counter medications. Your employer decides what goes on the list. The IRS publishes a long list of may have access to medical expenses, but your employer can be more restrictive than that—they cannot be less restrictive.

Preventive care covered at no cost by your health plan (like annual checkups or screenings) cannot be reimbursed through an HRA, because you did not pay anything out of pocket. The HRA reimburses what you actually spent.

HRAs Tied to Your Health Plan (Integrated HRAs)

Most HRAs are integrated, meaning they work alongside your employer's health insurance plan. Your health plan has a deductible—say, $1,500—and your HRA has a balance of $1,000. When you go to the doctor, you pay the first $1,000 out of pocket, then the HRA reimburses it. You still owe the remaining $500 of the deductible yourself.

The employer controls how much of the deductible the HRA covers. Some employers fund the HRA at exactly the deductible amount; others fund it for less or more. This is a design choice made when the plan is set up.

Once you meet your deductible (including the HRA reimbursement), your health insurance takes over and pays its share of costs. The HRA does not disappear—you can still use it for copays and coinsurance for the rest of the year.

HRAs Without a Health Plan (Standalone HRAs)

Some employers, particularly very small ones, offer an HRA without offering a health insurance plan at all. This is called a standalone HRA or excepted benefit HRA. You buy your own health insurance on the individual market or through a spouse's plan, and the HRA reimburses your out-of-pocket costs.

Standalone HRAs have strict limits on what they can cover. They can reimburse individual health insurance premiums, medical expenses, and dental and vision costs, but the rules are tighter than for integrated HRAs. Your employer must follow specific IRS rules about how much they can fund and who can participate.

If your employer offers a standalone HRA, ask whether it is designed to work with individual market insurance or with a spouse's plan. The answer determines whether it makes sense for your situation.

What Happens to Your HRA When You Leave Your Job

When you leave your employer, your HRA balance does not follow you. The money stays with your former employer. You lose access to it when ready, even if you have pending claims for expenses you already incurred.

Some employers allow you to submit claims for a short window after you leave—typically 30 to 90 days. Check your plan documents or ask your benefits administrator before you resign. If you have medical expenses coming up, submit claims before your last day if you can.

If your employer offers COBRA (the federal law that lets you keep health insurance after leaving a job), the HRA does not extend under COBRA. Your health insurance continues, but the reimbursement account ends.

HRAs Versus HSAs and FSAs

An HRA is employer-funded and employer-owned. An HSA is your personal account that you own and control, even after you leave the job. An FSA is employer-owned like an HRA, but you contribute pre-tax money from your paycheck, and you lose any unused balance at the end of the year (with a small carryover exception in some plans).

If your employer offers both an HRA and an HSA, you generally cannot use both in the same year—the IRS rules prevent it. Your employer will tell you which one you are enrolled in, or you may have a choice. An HSA is usually better if you plan to change jobs, because you keep the money. An HRA is better if you want your employer to fund the account without any contribution from you.

FSAs have a "use it or lose it" rule: unused money at the end of the year goes back to your employer. HRAs do not have this rule—your employer decides whether unused funds roll over or are forfeited. Check your plan documents to know which applies to you.

Frequently Asked Questions

Can I take my HRA balance with me if I change jobs?

No. The HRA balance belongs to your employer and stays with them when you leave. You lose access to the account when ready upon termination. Some employers allow a brief window (30 to 90 days) to submit claims for expenses you already incurred, but this varies by plan.

What happens to unused HRA money at the end of the year?

That depends on your employer's plan design. Some employers allow unused funds to roll over into the next year; others do not. A few employers allow a small carryover (like $500) and forfeit the rest. Check your plan documents or ask your benefits administrator which rule applies to your HRA.

Can I use my HRA to pay for my spouse's or child's medical expenses?

Yes, if they are covered under your health insurance plan. The HRA reimburses may have access to medical expenses for you and your covered dependents. If your spouse has their own health insurance through their employer, you cannot use your HRA to reimburse their out-of-pocket costs under that separate plan.

Do I have to submit receipts every time I use my HRA?

If your HRA comes with a debit card, you may not need to submit receipts at the point of sale. However, the HRA administrator may ask for documentation later to verify the expense was may have access to. If you do not have a debit card, you submit a claim with a receipt or explanation of benefits after you pay out of pocket.

What if my employer stops offering an HRA?

If your employer discontinues the HRA, any unused balance is forfeited—you cannot carry it over or take it with you. Some employers give employees a grace period to submit claims for recent expenses before the plan closes. Ask your benefits administrator what the timeline is if this happens.