Health Reimbursement Arrangement (HRA)
A health reimbursement arrangement (HRA) is a tax-advantaged account that allows both employers and employees to save on the cost of health care. With an HRA, an employer sets aside a specific amount of pretax dollars for employees to pay for health care expenses on an annual basis. Employees are reimbursed tax-free for qualified medical expenses.
Any funds reimbursed from HRA plans are exempt from payroll and FICA taxes. Funds are also tax-free for employees.
Lower your premiums
An HRA can lower an employer’s premiums because it must be used in conjunction with a high deductible medical plan.
Help people save
Because employers decide how much to contribute and what medical expenses the account can be used for, employees have a financial incentive to control and manage their health care spending.
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