What Is A Health Reimbursement Arrangement?


          A Health Reimbursement Arrangement (HRA) is a plan set up by an employer. It covers medical expenses related to the care of employees and their dependents. This type of fund can be claimed as a deduction by the business and is usually tax free for the employee. This is often an attractive option for businesses because they determine how much will be in the fund. Any expenses over that amount will be covered by the employee.

          This is not an account that can have withdrawals as necessary. The expense must be made, then it will be reimbursed. Since the HRA belongs to the company, if the employee leaves, they will lose the benefit. Starting in January 2020, HRA’s will undergo a massive change. Our next post will detail why that is.

Comments

  1. UnknownOctober 15, 2019 at 10:16 AM

    Is this in lieu of health insurance ?

    ReplyDelete
    Replies
    1. Sykes AccountingOctober 18, 2019 at 10:43 AM

      Hi! An HRA as described here is something that is used to supplement an existing Health Insurance plan. You asked a very good question, and the next few articles on this subject will describe other options that can be used to replace those plans.

      Delete

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