How Does an HRA Work?

A health reimbursement arrangement (HRA) is an employer-funded health care account designed to help with employees’ medical costs. Employers make the funds available for health care spending in the HRA account and determine the amount offered to each employee to pay for qualified services and products related to health and medical care. In some cases, employers offer an HRA plan as an alternative to a group health insurance as a benefits option when group insurance isn’t a possibility.

As an employee, you can use the HRA funds to pay for qualified health care products and services and won’t have to worry about paying taxes on the money you withdraw for medical spending. This account is typically administered either by using a designated payment card or by submitting your receipt for reimbursement. Just keep in mind that this account is only funded by your employer, and employees cannot make contributions.

There are many types of HRAs available with different eligibility requirements. If you have an HRA but are unsure about the plan type, you should speak with your human resources representative or HRA administrator to learn how your employer-sponsored HRA works.

What Can You Pay For with an HRA?

Once you understand how your HRA plan works, you will need to know what you can pay for with your funds. You can use your tax-free HRA dollars to cover the cost of many eligible health care expenses, so we’ve created a convenient list of medical products and services you can potentially pay for using your HRA. Common HRA-eligible expenses include things like prescriptions, flu shots, vision and dental care, and many over-the-counter medicines, but really there are hundreds of other items and services you can pay for with your HRA. If you have independent health insurance in addition to your HRA, you may also be able to use HRA funds to pay for coinsurance, deductibles, and copays for doctor’s visits.

Expenses that are generally not covered by an HRA include things like teeth whitening products, make up, deodorant, and other items that are not necessary for maintaining health. Also keep in mind that with HRAs, the eligible expenses can vary depending on what type of HRA you have and any limits your employer may stipulate since they are administering the funds.

Be in the Know: Download Your Free HRA Eligible Expense Guide

Once you understand how your HRA plan works, you will need to know what you can pay for with your funds. You can use your tax-free HRA dollars to cover the cost of many eligible health care expenses, so we’ve created a convenient list of medical products and services you can potentially pay for using your HRA. Common HRA-eligible expenses include things like prescriptions, flu shots, vision and dental care, and many over-the-counter medicines, but really there are hundreds of other items and services you can pay for with your HRA. If you have independent health insurance in addition to your HRA, you may also be able to use HRA funds to pay for coinsurance, deductibles, and copays for doctor’s visits.

Expenses that are generally not covered by an HRA include things like teeth whitening products, make up, deodorant, and other items that are not necessary for maintaining health. Also keep in mind that with HRAs, the eligible expenses can vary depending on what type of HRA you have and any limits your employer may stipulate since they are administering the funds.