Health Reimbursement Accounts
A Defined Contribution Approach to Health Benefits
The IRS issued guidance in 2003 that clarifies the favorable tax treatment of a
“Health Reimbursement Arrangement” (HRA), which is funded by the employer and reimburses
an employee for out-of-pocket medical expenses up to a specified dollar amount per
year.
Unlike Flexible Spending Accounts (click
for comparison), HRAs allow contributions to carry forward from year to
year. However, as opposed to FSA's or Health Savings Accounts (HSA)
(compare), only the employer may contribute to the
plan.