Health Reimbursement Account Definition

An HRA is an employer-funded account that reimburses employees for uncovered medical expenses. The funds are tax-exempt for the employer and, because they are donated on your behalf only to qualified medical expenses, are also usually tax-exempt (but, technically, income) for the employee. As an HRA is employer funded, employers have broad discretion in how the plans are administered; for example, an HRA can be terminated virtually at will by the employer. Given the ever-rising costs associated with healthcare, employees usually consider an HRA to be a valuable employment benefit.