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Frequently Asked Questions About Healthcare Reimbursement Arrangements

What is an HRA?
A Healthcare Reimburement Arrangement(HRA) is an arrangement that employers create and fund to pay for a portion of medical health plan expenses incurred by employees, their spouses, and dependent children.

Must HRAs be reported on an income tax return?
Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for HRAs on your income tax return.

Who can contribute to an HRA?
HRAs are funded solely through employer contributions and may not be funded through employee salary deferrals under a cafeteria plan. These contributions are not included in the employee's income. You do not pay federal income taxes or employment taxes on amounts your employer contributes to the HRA.

How much can be contributed annually to an HRA?
There is no limit on the amount of money your employer can contribute to the accounts. Additionally, the maximum reimbursement amount credited under the HRA in the future may be increased or decreased by amounts not previously used.

What expenses are eligible for payment from an HRA?
Generally, distributions from an HRA must be paid for qualified incurred medical expenses. The expense must have been incurred on or after the date the employee is enrolled in the HRA.