Health Insurance

HRA (Health Reimbursement Arrangement)

Unlike an HSA or FSA, an HRA is funded entirely by the employer and reimburses employees for medical costs up to a set annual limit.

Last reviewed: May 2026 · Editorial methodology

Definition

A Health Reimbursement Arrangement (HRA) is an employer-funded benefit account that reimburses employees tax-free for qualified medical expenses, and in some HRA types, for individual health insurance premiums. Unlike HSAs or FSAs, employees cannot contribute their own money to an HRA — only employers fund them. The most common forms include the Qualified Small Employer HRA (QSEHRA), which allows small businesses to reimburse individual market premiums up to $6,350 (self-only) or $12,800 (family) in 2026, and the Individual Coverage HRA (ICHRA), which has no dollar cap and can be offered by employers of any size. Unused HRA funds may roll over to the next year at the employer's discretion, giving them more flexibility than FSAs. Employees do not pay income tax on reimbursements received, making HRAs a powerful tool for businesses that cannot afford group health insurance. ICHRA eligibility affects marketplace premium tax credit eligibility, so employees should compare options carefully.

Where this term matters

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Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

HSA (Health Savings Account)An HSA lets you contribute pre-tax dollars, grow them tax-free, and withdraw tax-free for medical costs — often called the triple tax advantage.FSA (Flexible Spending Account)An FSA reduces your taxable income by letting you set aside pre-tax money for predictable medical costs, but unspent funds generally expire at year-end.LPFSA (Limited Purpose FSA)An LPFSA lets HSA holders enjoy FSA tax benefits for dental and vision costs without disqualifying their HSA.Premium Tax CreditThe premium tax credit (PTC) makes marketplace coverage affordable by offsetting a portion of your monthly premium based on your income and the cost of the benchmark Silver plan.Health Insurance MarketplaceThe marketplace, also called the exchange, is where most people shop for ACA plans and access premium tax credits to reduce their monthly premium.

Related guides

Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

Cover Forge USA Editorial Team

Editorial Lead

This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.

Reviewed June 2026

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